23Rd ANNUAL REPORT and Statement of Accounts for the Year Ended 31St March 2014 NAGA LIMITED

Since 1962

NAGA LIMITED

23rd ANNUAL REPORT and Statement of Accounts for the Year Ended 31st March 2014 NAGA LIMITED

Since 1962 BOARD OF DIRECTORS Sri. K.S. KAMALAKANNAN Chairman & Managing Director Smt. MAGESWARI KANNAN Joint Managing Director Sri. SOUNDER KANNAN Whole - Time Director Sri. L.A. IRUDAYARAJ Independent Director Dr. K. VENKATACHALAM Independent Director Sri. S. RAMESH Independent Director

Sri. V. MARIKANNAN Company Secretary AUDITORS M/s. D. SAMPATHKUMAR & Co., Chartered Accountants 5, South Boag Road, T-Nagar, Chennai - 600 017 BANKERS : AXIS BANK LIMITED, DINDIGUL STATE BANK OF INDIA, DINDIGUL KARUR VYSYA BANK, DINDIGUL STANDARD CHARTERED BANK, MUMBAI REGISTERED OFFICE : No.1, Anna Pillai Street, Chennai - 600 001 FACTORIES 1) Naga Limited - Foods (Unit - I), No.1, Trichy Road, Dindigul - 624 005 2) Naga Limited - Foods (Unit - II), No.133, Trichy Road, Dindigul - 624 005 3) Naga Limited - Retail, No.1, Modern Nagar, Karur Road, Dindigul - 624 005 4) Naga Limited - Minerals, No.9, Trichy Road, Dindigul - 624 005 5) Naga Limited - Detergents, No.1, Oddanchatram Road, Vedasandur - 624 710 23rd ANNUAL REPORT AND STATEMENT OF ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2014 NAGA LIMITED

CHAIRMAN’S SPEECH DEAR STAKEHOLDERS OF NAGA, rd It is my pleasure to place your Company’s 23 Annual General Meeting and presenting the financial statements for the year 2013 - 2014 before you. Your company grew its consolidated revenues by 14.69% over the previous year, touching Rs.424.67 crores. But the cash profit is less by 5.74% comparing to last year. This is due to increase in finance cost and other direct expenses. The total production of all divisions has raised to 3,83,837 MT as against previous year production of 3,56,000 MT. Further, long term Measures are under consideration and implementation that will boost the efficiency and productivity. Challenge is growing from the current level to step ahead. Presenting below, Business performance of each divisions. FOODS : There is increase in production by 8% during the year compared to last year. We are expecting this growth for this year also. Past years comparative statement for 5 years production are given below :

Year 2013-14 2012-13 2011-12 2010-11 2009-10

Production MT 1,46,769 1,35,220 1,35,216 1,30,309 1,12,292

Growth % 8 -- 4 16 (6)

DETERGENTS : Detergents business established in 1990 and is in operation for 24 years. NAGA, is the third largest manufacturer of detergents of M/s. Hindustan Unilever Limited. Past years comparative statements for five years production are given below.

Year 2013-14 2012-13 2011-12 2010-11 2009-10

Production MT 1,28,077 1,16,891 97,657 80,645 66,857

Growth % 10 20 21 21 21

MINERALS : The year 2013-14, we sustained the 1,00,000 mark in both production and sales, with 5% growth. We brought JUMBO MILL and Micro Mill in our production process. This will enable us to market in new areas such as paint, plastic, PVC Industries. We have seen 40% growth in our live stock industry.

Year 2013-14 2012-13 2011-12 2010-11 2009-10

Production MT 1,08,991 1,03,950 63,889 70,965 68,455

Growth % 5 61 (10) 4 11

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WINDMILLS : The Energy Division of your company now has total 10 windmills with an installed capacity of 8175KW compared to its humble beginning in 2003 with 2 windmills and installed capacity of 1500KW. Owing to the poor evacuation by the TANGEDCO the generation had comparatively been 43 lacs units less than last year. The issue was represented at various forums. The comparative statement of the last five years units generated is as below.

Year 2013-14 2012-13 2011-12 2010-11 2009-10 WEG Units 120 163 118 141 135 Generated in lacs Division Units 174 131 137 138 123 Consumed in lacs Excess / (Short) 54 (32) 19 (3) (12) Consumption

OTHER DEVELOPMENTS : SOLAR : We have installed 600 KW solar power on the roof of the Detergent Unit, Vedasandur. The generation of power was satisfactory and in line with expectations. Grid connectivity is under progress and shall be commissioned during July 2014. This will ensure optimum usage of energy generated. FINANCIAL INFORMATION : The quantum leap in the business development is reflected in the company’s Book Value of the equity shares of Rs.10/- each for the last five years as below, thus maximising the wealth of the shareholders.

Year 2013-14 2012-13 2011-12 2010-11 2009-10

Per Share Value Rs.43.41 Rs.37.00 Rs.26.62 Rs.23.08 Rs.18.26

FINANCE : (a) Our Turnover has increased by 14.69% (b) Our Net Profit has decreased by 27.83% (c) Our Cash Profit has decreased by 5.74% DIVIDEND POLICY : Taking into consideration the overall profitability position, the Board of Directors have recommended a dividend of 6% on the Equity Share of Rs. 10/- each for the year 2013-14. The total amount of equity dividend payable including dividend tax is Rs. 99.36 lacs. GRATITUDE : We are thankful to the all stakeholders viz., Shareholders, Directors, Employees, Banks and Financial Institutions, Auditors, Consultants, Service Providers and Government Departments for continued support and encouragement. GOD BE WITH NAGA FAMILY. K.S. Kamalakannan Chairman & Managing Director.

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NOTICE TO THE SHAREHOLDERS Notice is hereby given that the Twenty Third Annual General Meeting of the Members of M/s. NAGA LIMITED will be held at the Presidency Club, No.51, Ethiraj Salai, Egmore, Chennai-600 008 on Friday the 01st August, 2014 at 12.15 P.M. to transact the following business: AGENDA ORDINARY BUSINESS: 1. To receive, consider and adopt the Financial Statements of the Company for the year ended on 31st March 2014 consisting of Audited Balance Sheet as at 31st March 2014 and the statement of profit and loss account for the year ended on that day together with the reports of the Board of Directors’ and Auditors’ thereon. 2. To declare a dividend on the equity shares of the Company. 3. To appoint a Director in place of Sri. Sounder Kannan (Holding DIN 01603823), who retires by rotation and being eligible, offers himself for re-appointment. 4. To appoint M/s. D. Sampathkumar & Co., Chartered Accountants (Registration No. 003556S) as statutory auditors of the Company and fix their remuneration.

SPECIAL BUSINESS: Item No.5 REAPPOINTMENT OF SRI. K.S. KAMALAKANNAN, CHAIRMAN AND MANAGING DIRECTOR To consider and if thought fit,to pass with or without modification(s), the following resolution as Special Resolution : “RESOLVED that pursuant to the provisions of Section 190, 196, 197 and other applicable provisions, if any, of the Companies Act, 2013 (“the Act”) read with schedule V part II section II thereto and subject to such approvals, if any, as may be necessary, consent of the Company be and is hereby accorded to the appointment of Sri. K.S. Kamalakannan (holding DIN 01601589) as the Chairman and Managing Director of the Company for a period of Three (3) years w.e.f. 01.08.2014, not liable to retire by rotation, on the terms and conditions, as set out in the explanatory statement attached to this notice and hereby approved, with liberty to the Board of Directors to revise the terms as to remuneration, from time to time within the limits provided for in the said schedule V part II section II or any amendment thereof for the time being in force.” Item No.6 REAPPOINTMENT OF SMT. MAGESWARI KANNAN, JOINT MANAGING DIRECTOR To consider and if thought fit, to pass with or without modification(s), the following resolution as Special Resolution: “RESOLVED that pursuant to the provisions of Section 190, 196, 197 and other applicable provisions, if any, of the Companies Act, 2013 (“the Act”) read with schedule V part II section II thereto and subject to such approvals, if any, as may be necessary, consent of the Company be and is hereby accorded to the appointment of Smt. Mageswari Kannan (holding DIN 02107556) as the Joint Managing Director of the Company for a period of Three (3) years w.e.f. 01.08.2014, liable to retire by rotation, on the terms and conditions, as set out in the explanatory statement attached to this notice and hereby approved, with liberty to the Board of Directors to revise the terms as to remuneration, from time to time within the limits provided for in the said schedule V part II section II or any amendment thereof for the time being in force.”

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Item No.7 REAPPOINTMENT OF SRI. SOUNDER KANNAN, WHOLE - TIME DIRECTOR

To consider and if thought fit, to pass with or without modification(s), the following resolution as Special Resolution:

“RESOLVED that pursuant to the provisions of Section 190, 196, 197 and other applicable provisions, if any, of the Companies Act, 2013 (“the Act”) read with schedule V part II section II thereto and subject to such approvals, if any, as may be necessary, consent of the Company be and is hereby accorded to the appointment of Sri. Sounder Kannan (holding DIN 01603823) as the Whole-Time Director of the Company for a period of Three (3) years w.e.f. 27.03.2014, liable to retire by rotation, on the terms and conditions, as set out in the explanatory statement attached to this notice and hereby approved, with liberty to the Board of Directors to revise the terms as to remuneration, from time to time within the limits provided for in the said schedule V part II section II or any amendment thereof for the time being in force.”

Item No.8

INCREASING BORROWING POWER OF THE BOARD OF DIRECTORS

To consider and if thought fit, to pass with or without modification(s), the following resolutions as Special Resolutions:

“RESOLVED that in supersession of the ordinary resolutions adopted at the extraordinary general meeting of the Company held on 12th September 2012 and pursuant to the provisions of section 180 (1) (c) and other applicable provisions, if any, of the Companies Act, 2013 including any statutory modifications or any amendments or any substitution or re-enactment thereof, if any, for the time being in force and all other applicable Acts, laws, rules, regulations and guidelines for the time being in force, the consent of the Company be and is hereby accorded to the Board of Directors of the Company for borrowing from time to time as they may think fit, any sum or sums of money not exceeding Rs. 400 crores (Rupees four hundred crores only) [including the money already borrowed by the Company] on such terms and conditions as the Board may deem fit, whether the same may be secured or unsecured and if secured, whether by way of mortgage, charge or hypothecation, pledge or otherwise in any way what so ever, over or in any respect of all, or any of the company’s assets and effects or properties whether movable or immovable, including stock in trade, notwithstanding that the money to be borrowed together with the money already borrowed by the Company (apart from the temporary loans obtained from the company’s bankers in the ordinary course of business) and remaining un-discharged at any given time, exceed the aggregate, for the time being, of the paidup capital of the Company and its free reserves.”

“RESOLVED FURTHER that for the purpose of giving effect to the above resolutions, the Board of Directors of the Company be and is hereby authorised to take all such actions and to give all such directions and to do all such acts, deeds, matters and things as may be necessary and / or expedient in that behalf. ”

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Item No.9 INCREASE IN THE REMUNERATION PAYABLE TO THE EXISTING RELATIVE OF DIRECTORS OCCUPYING THE POSITION OF OFFICE OR PLACE OF PROFIT. To consider and if thought fit to pass with or without modification(s), the following resolution as Special Resolution:

“RESOLVED that pursuant to the provisions of the Companies Act, remuneration payable to Sri. D. Vijay Anand, Vice-President, Foods Division, Son in law of Sri. K.S. Kamalakannan, Chairman & Managing Director, and subject to such approvals, be increased upto a sum not exceeding Rs. 29.50 lakhs per annum and on the terms and conditions, as set out in the explanatory statements attached to this notice and hereby approved, with liberty to the Board of Directors to revise the terms as to remuneration, from time to time within the limits depending upon the performance of the individual concerned and subjected to the recommendations of the Nomination and Remuneration Committee, with effect from 01.03.2014 be and is hereby ratified.” Item No.10

INCREASE IN THE REMUNERATION PAYABLE TO THE EXISTING RELATIVE OF DIRECTORS OCCUPYING THE POSITION OF OFFICE OR PLACE OF PROFIT. To consider and if thought fit to pass with or without modification(s), the following resolution as Special Resolution:

“RESOLVED that pursuant to the provisions of the Companies Act, remuneration payable to Smt. Monaa Kannan, CEO, Retail Division, Daughter in law of Sri. K.S. Kamalakannan, Chairman & Managing Director, and subject to such approvals, be increased upto a sum not exceeding Rs.29.50 lakhs per annum and on the terms and conditions, as set out in the explanatory statements attached to this notice and hereby approved, with liberty to the Board of Directors to revise the terms as to remuneration, from time to time within the limits depending upon the performance of the individual concerned and subjected to the recommendations of the Nomination and Remuneration Committee, with effect from 01.03.2014 be and is hereby ratified.” Item No.11

“RESOLVED that pursuant to the provisions of the Companies Act, remuneration payable to Ms. M. Jayalalitha, CEO, Detergents Division, Sister of Smt. Mageswari kannan, Joint Managing Director, and subject to such approvals, be increased upto a sum not exceeding Rs.29.50 lakhs per annum and on the terms and conditions, as set out in the explanatory statements attached to this notice and hereby approved, with liberty to the Board of Directors to revise the terms as to remuneration, from time to time within the limits depending upon the performance of the individual concerned and subjected to the recommendations of the Nomination and Remuneration Committee, with effect from 01.03.2014 be and is hereby ratified.”

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Item No.12 INCREASE IN THE REMUNERATION PAYABLE TO THE EXISTING RELATIVE OF DIRECTORS OCCUPYING THE POSITION OF OFFICE OR PLACE OF PROFIT.

To consider and if thought fit to pass with or without modification(s), the following resolution as Special Resolution:

“RESOLVED that pursuant to the provisions of the Companies Act, remuneration payable to Sri. M. Sukumar, Commercial Manager, Minerals Division, Brother of Smt. Mageswari Kannan, Joint Managing Director, and subject to such approvals, be increased upto a sum not exceeding Rs.29.50 lakhs per annum and on the terms and conditions, as set out in the explanatory statements attached to this notice and hereby approved, with liberty to the Board of Directors to revise the terms as to remuneration, from time to time within the limits depending upon the performance of the individual concerned and subjected to the recommendations of the Nomination and Remuneration Committee, with effect from 01.03.2014 be and is hereby ratified.”

Item No.13

INCREASE IN THE REMUNERATION PAYABLE TO THE EXISTING RELATIVE OF DIRECTORS OCCUPYING THE POSITION OF OFFICE OR PLACE OF PROFIT.

To consider and if thought fit to pass with or without modification(s), the following resolution as Special Resolution:

“RESOLVED that pursuant to the provisions of the Companies Act, remuneration payable to Smt. Lakshmi Vijay Anand, CEO, Foods Division, Daughter of Sri. K.S. Kamalakannan, Chairman & Managing Director, and subject to such approvals, be increased upto a sum not exceeding Rs.29.50 lakhs per annum and on the terms and conditions, as set out in the explanatory statements attached to this notice and hereby approved, with liberty to the Board of Directors to revise the terms as to remuneration, from time to time within the limits depending upon the performance of the individual concerned and subjected to the recommendations of the Nomination and Remuneration Committee, with effect from 01.03.2014 be and is hereby ratified.”

Item No. 14

REAPPOINTMENT OF SRI. S. RAMESH AS AN INDEPENDENT DIRECTOR

To consider and if thought fit to pass with or without modification(s), the following resolution as Special Resolution:

“RESOLVED that pursuant to the provisions of sections 149, 150, 152 and any other applicable provisions of the Companies Act, 2013 and rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) read with schedule IV to the Companies Act, 2013, Sri. S. Ramesh (holding DIN 01620265), be and is hereby re- appointed as an independent director of the Company, not liable to retire by rotation to hold office for second consecutive five years untill the conclusion of 28th AGM or upto 30th September 2019 whichever is earlier.”

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Item No. 15 REAPPOINTMENT OF SRI. L.A. IRUDAYARAJ AS AN INDEPENDENT DIRECTOR To consider and if thought fit to pass with or without modification(s), the following resolution as Special Resolution: “RESOLVED that pursuant to the provisions of sections 149, 150, 152 and any other applicable provisions of the Companies Act, 2013 and rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) read with schedule IV to the Companies Act, 2013, Sri. L.A. Irudayaraj (holding DIN 01973946), be and is hereby re-appointed as an independent director of the Company, not liable to retire by rotation to hold office for second consecutive five years untill the conclusion of 28th AGM or upto 30th September 2019 whichever is earlier.” Item No.16 CREATION OF CHARGES ON THE ASSETS OF THE COMPANY To consider and if thought fit to pass with or without modification(s), the following resolutions as Special Resolutions: “RESOLVED THAT in supersession of the Ordinary Resolution passed at the Extra-ordinary General Meeting of the shareholders of the Company held on September 29, 2000 and pursuant to Section 180(1)(a ) and any other applicable provisions of the Companies Act, 2013 and the rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force), consent of the shareholders of the Company be and is hereby accorded for creation by the Board of Directors on behalf of the Company, of such mortgages/ charges/ hypothecation and floating charges (in addition to the existing mortgages / charges / hypothecation created by the Company in favour of the lenders) in such form and in such manner as may be agreed to between the Board of Directors and the lenders, on all or any of the present and future immovable and / or movable properties of the Company wherever situated, of every nature and kind whatsoever to secure any Indian Rupee or foreign currency loans, Debentures, advances and all other moneys payable by the Company to the lenders concerned, subject, however, to an overall limit of Rs.400 Crores (Rupees Four Hundred Crores only) of loans or advances already obtained or to be obtained from, in any form including by way of subscription to debentures issued or to be issued by the Company to, any financial institution, bank, body corporate, company, insurer or to the general public.”

RESOLVED FURTHER that the Board be and is hereby authorized to do all such acts, deeds and things and to sign all such documents as may be necessary, expedient and incidental thereto to give effect to this resolution.”

BY ORDERS OF THE BOARD

Place : Chennai For NAGA LIMITED Date : 12.05.2014 V. Marikannan Company Secretary

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Note:

 A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON POLL ON HIS BEHALF. A PROXY NEED NOT BE A MEMBER OF THE COMPANY.

 A person can act as proxy on behalf of members not exceeding fifty (50) and holding in the aggregate not more than ten percent of the total share capital of the Company.

 The instrument appointing the proxy must be deposited at the Registered Office of the Company not less than 48 hours before the commencement of the meeting.

 An explanatory statement pursuant to Section 102 (1) of the Companies Act, 2013, relating to the Special Business to be transacted at the meeting is annexed hereto.

 Pursuant to Clause 49 of the Listing Agreement additional information on directors seeking appointment / re-appointment at the annual general meeting is provided in the annual report.

 The Register of Members and the Share Transfer Books of the Company will remain closed from 29.07.2014 to 01.08.2014 (both days inclusive).

 Members holding shares in physical form are requested to notify change of address and change in bank mandate if any, to M/s. Cameo Corporate Services Limited, “Subramanian Building” No.1, Club House Road, Chennai – 600 002, the Registrar and Share Transfer Agents and those who hold shares in dematerialized form are requested to notify their Depository Participants (DP) any change in address and/or bank mandate.

 Members who are holding shares more than one folio under physical form may approach the Company's Share Transfer Agent for consolidation with respective details.

 The Securities and Exchange Board of India (SEBI) has mandated the submission of Permanent Account Number (PAN) by every participant in securities market. Members holding shares in electronic form are, therefore, requested to submit the PAN to their Depository Participants with whom they are maintaining their demat account(s). Members holding shares in physical form can submit their PAN details to the Registrar and Share Transfer Agent.

 Members are requested to bring their Client ID and DP ID or Folio Numbers, as may be applicable, for easy identification of attendance at the meeting.

 Corporate Members intending to send their authorized representatives to attend the Meeting are requested to send a certified copy of Board resolution authorizing their representative to attend and vote on their behalf at the Meeting.

 Electronic copy of the Annual Report for the financial period ended 31.03.2014 is being sent to all the members whose email IDs are registered with the Company/Depository Participants(s) for communication purposes unless any member has requested for a hard copy of the same. For members who have not registered their email address, physical copy of the Annual Report is being sent in the permitted mode.

 Electronic copy of the Notice of the 23rd Annual General Meeting of the Company inter alia indicating the process and manner of e-voting along with Attendance Slip and Proxy Form is

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being sent to all the members whose email IDs are registered with the Company/Depository Participants(s) for communication purposes unless any member has requested for a hard copy of the same. For members who have not registered their email address, physical copy of the Notice of the 23rd Annual General Meeting of the Company inter alia indicating the process and manner of e-voting along with Attendance Slip and Proxy Form is being sent in the permitted mode.

 Members may also note that the Notice of the 23rd Annual General Meeting and the Annual Report for the financial period ended on 31.03.2014 will also be available on the Company's website www.nagamills.com for their download. The physical copies of the aforesaid documents will also be available at the Company's Registered Office in Chennai for inspection during normal business hours on working days. Even after registering for e-communication, members are entitled to receive such communication in physical form, upon making a request for the same, by post free of cost. The investors may contact the Company Secretary for redressal of their grievances/queries. For this purpose, they may either write to him at the Registered office address or e-mail their grievances/queries to the Company Secretary at the following e-mail address: [email protected]

 Members are requested to bring their copy of the Annual Report with them to the Annual General Meeting.

 Members seeking any information or clarifications on the Annual Report are requested to send the written queries to the Company at least Two Weeks before the meeting to enable the Company to compile the information and provide replies at the meeting.

 All documents referred to in the accompanying Notice and the Explanatory Statement shall be open for inspection at the Registered Office of the Company during normal business hours (10.00 am to 5.00 pm) on all working days, up to and including the date of the Annual General Meeting of the Company. E-VOTING

 In compliance with provisions of Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014, the Company is pleased to provide members facility to exercise their right to vote at the 23rd Annual General Meeting (AGM) by electronic means and the business may be transacted through e-Voting Services provided by Central Depository Services (India) Limited (CDSL):

 The Company has appointed Mr. G.Sreenivasa Rao (Membership no. 5691), Practicing Company Secretary, representing M/s.G.S.R. & Co., to act as the Scrutinizer for conducting the electronic voting process in a fair and transparent manner.The procedure and instructions for the voting through electronic means is, as follows:

 The voting period begins on 27th July, 2014 (10.00 am) and ends on 28th July, 2014 (6.00 pm) During this period shareholders' of the Company, holding shares either in physical form or in dematerialized form, as on the cut-off date 4th July, 2014 , may cast their vote electronically. The e-voting module shall be disabled by CDSL for voting thereafter.

 The shareholders should log on to the e-voting website www.evotingindia.com during the voting period.

 Click on “Shareholders” tab.

 Now, select the “COMPANY NAME” from the drop down menu and click on “SUBMIT”

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 Now Enter your User ID

 For CDSL: 16 digits beneficiary ID,

 For NSDL: 8 Character DP ID followed by 8 Digits Client ID,

 Members holding shares in Physical Form should enter Folio Number registered with the Company.

 Next enter the Image Verification as displayed and Click on Login.

 If you are holding shares in demat form and had logged on to www.evotingindia.com and voted on an earlier voting of any company, then your existing password is to be used.

 If you are a first time user follow the steps given below:

For Members holding shares in Demat form and in Physical form

PAN Enter your 10 digit alpha-numeric *PAN issued by Income Tax Department (Applicable for both demat shareholders as well as physical shareholders)

 Members who have not updated their PAN with the Company/Depository Participant are requested to use the first two letters of their name and the 8 digits of the sequence number in the PAN field.

 In case the sequence number is less than 8 digits enter the applicable number of 0's before the number after the first two characters of the name in CAPITAL letters. Eg. If your name is Ramesh Kumar with sequence number 1 then enter RA00000001 in the PAN field.

 Sequence number has been provided as Sl. No. in the address label.

DOB Enter the date of birth as recorded in your demat account or in the company records for the said demat account or folio in dd/mm/yyyy format.

Dividend Bank Enter the dividend Bank Details as recorded in your demat account or in the Details company records for the said demat account or folio.

 Please enter the DOB or Dividend Bank Details in order to login. If the details are not recorded with the depository or Company please enter the member id / Folio Number in the Dividend Bank details field.

 After entering these details appropriately, click on “SUBMIT” tab.

 Members holding shares in physical form will then directly reach the Company selection screen. However, members holding shares in demat form will now reach 'Password Creation' menu wherein they are required to mandatorily enter their login password in the new password field. Kindly note that this password is to be also used by the demat holders for voting for resolutions of any other company on which they are eligible to vote, provided that company opts for e-voting through CDSL platform. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential.

 For Members holding shares in physical form, the details can be used only for e-voting on the resolutions contained in this Notice.

 Click on the EVSN for the relevant on which you choose to vote.

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 On the voting page, you will see “RESOLUTION DESCRIPTION” and against the same the option “YES/NO” for voting. Select the option YES or NO as desired. The option YES implies that you assent to the Resolution and option NO implies that you dissent to the Resolution.

 Click on the “RESOLUTIONS FILE LINK” if you wish to view the entire Resolution details.

 After selecting the resolution you have decided to vote on, click on “SUBMIT”. A confirmation box will be displayed. If you wish to confirm your vote, click on “OK”, else to change your vote, click on “CANCEL” and accordingly modify your vote.

 Once you “CONFIRM” your vote on the resolution, you will not be allowed to modify your vote.

 You can also take out print of the voting done by you by clicking on “Click here to print” option on the Voting page.

 If Demat account holder has forgotten the same password then Enter the User ID and the image verification code and click on Forgot Password & enter the details as prompted by the system.

 Note for Institutional Shareholders

 Institutional shareholders (i.e. other than Individuals, HUF, NRI etc.) are required to log on to https://www.evotingindia.co.in and register themselves as Corporates.

 A scanned copy of the Registration Form bearing the stamp and sign of the entity should be emailed to [email protected].

 After receiving the login details they have to create a compliance user should be created who would be able to link the account(s) for which they wish to vote on.

 The list of accounts should be mailed to [email protected] and on approval of the accounts they would be able to cast their vote.

 A scanned copy of the Board Resolution and Power of Attorney (POA) which they have issued in favour of the Custodian, if any, should be uploaded in PDF format in the system for the scrutinizer to verify the same.

 In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions (“FAQs”) and e-voting manual available at www.evotingindia.co.in under help section or write an email to [email protected].

 The Scrutinizer will submit his report to the Chairman after completion of the scrutiny. The result of the voting on the Resolutions at the Meeting shall be announced by the Chairman or any other person authorized by him on 2nd August, 2014. The results declared alongwith the Scrutinizer's report, will be posted on the Company's website and on CDSL's website on 2nd August, 2014.

I. EXPLANATORY STATEMENT AS REQUIRED UNDER SECTION 102(1) OF THE COMPANIES ACT, 2013. Item No.5,6 & 7 The Board of Directors of the Company at its meeting held on 10th February 2014 has appointed Sri. Sounder Kannan (holding DIN 01603823) as the Whole-Time Director of the Company as recommended by the Remuneration Selection Committee subject to the approval of Shareholders for a period of 3 years w.e.f. 27.03.2014 at the remuneration, in accordance with norms laid down in Schedule V Part II Section II and other applicable provisions of the Companies Act, 2013.

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The Board of Directors of the Company at its meeting held on 12th May 2014 has appointed Sri K.S.Kamalakannan (holding DIN 01601589) as the Chairman and Managing Director and Smt. Mageswari Kannan (holding DIN 02107556) as the Joint Managing Director of the Company as recommended by the Nomination & Remuneration Committee subject to the approval of Shareholders for a period of 3 years w.e.f. 01.08.2014 at the remuneration, in accordance with norms laid down in Schedule V Part II Section II and other applicable provisions of the Companies Act, 2013 given below:

Sri. K.S. Kamalakannan Smt. Mageswari Kannan Sri. Sounder Kannan Particulars Chairman and Joint Managing Director Whole-Time Director Managing Director

Rs. 5,00,000/- Rs. 3,25,000/- Rs. 3,00,000/- Salary (Rupees Five Lakhs (Rupees Three Lakhs and (Rupees Three Lakhs per Month) Twenty Five Thousand per Month) per Month)

At the rate of 1% on the Net Profits of the Company computed in the manner laid Commission down in the Companies Act, 2013 for the each of the above persons.

a) Contribution to Provident Fund, Superannuation Fund or Annuity Fund to the Perquisites extent these either singly or put together are not taxable under the Income Tax (for each of the Act, 1961; above persons) b) Gratuity payable at a rate not exceeding half a month’s salary for each completed year of service, and

Other payments (for each of the above persons) :

(a)Medical benefit for Subject to ceiling of one month salary in a year of service. Reimbursement of Medical expenses actually incurred for self and family :

(b)Leave and Leave Travel Leave as per Rules of the Company including encashment of Concession leave. Travel concession for self and family once in a year incurred in accordance with the rules of the Company.

(c) Club Fees Club Fees subject to a maximum of two clubs. This will not include Admission Fees and Life Membership Fees.

(d)Car To provide a car for use in Company’s business. The same shall not be considered as a perquisite.

(e)Telephone and Mobile Phone To provide a Telephone at residence for Company’s Use. The same shall not be considered as a perquisite. To provide Mobile phones exclusively for the purpose of business.

(f) Entertainment Expenses Entitled for reimbursement of Entertainment expenses properly incurred for the business of the Company.

rd 10 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

The remuneration and perquisites shall be subject to the overall ceiling under Section 196 and 197 of the Act.

In the event of absence or inadequacy of profit in any financial year during the tenure of the above Directors, salary and perquisites would be paid as above and prorata eligible commission if any, subject to the doubled ceiling limit specified under Paragraph of Section II of Part II of Schedule V of the Companies Act, 2013 as modified from time to time.

The Board recommends this resolutions set out in Item No. 5,6 & 7 for approval of the members.

Sri. K.S.Kamalakannan, Smt. Mageswari Kannan and Sri. Sounder Kannan are interested in the said resolutions. None of the other Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested.

Item No.8

Pursuant to section 180 of the Act, borrowings (Apart from temporary loans obtained from the Company’s bankers in the ordinary course of business) in excess of aggregate of paid up capital and free reserves not set apart for any specific purposes, require the consent of members in a general meeting by way of special resolution.

th The Members at the extraordinary General Meeting of the Company held on 12 September, 2012 had authorised the Board of Directors of the Company to borrow monies from banks, financial institutions or bodies corporate upto Rs. 200 crores.

Keeping in view the growth plans and expansions of the production capacity of the divisions of the Company, it is proposed to increase the said borrowing limit to Rs. 400 crores.

The Board recommends the Special Resolutions set out in this notice for approval by the members.

None of the Directors and Key Management Personnel of the Company and their relatives is, in any way, concerned or interested, financial or otherwise, in this Resolution.

Item No. 9, 10, 11, 12 & 13

At the 20th Annul General Meeting held on 25th July 2011, the Shareholders had approved the appointment of Sri. D.Vijay Anand, Vice-President, Minerals Division (now Foods Division), Smt. Monaa Kannan, Manager – Human Resources (now CEO of the Retail Division), Ms. M. Jayalalitha, Business Head (now CEO) of the Detergents Division, Sri. M.Sukumar, Commercial Manager, Minerals Division of the Company with effect from 01.06.2011

And also at the 21st Annul General Meeting held on 2nd August 2012, the Shareholders had approved the appointment of Smt. Lakshmi Vijay Anand, Business Head – Minerals Division of the Company with effect from 01.10.2011 and presently she has been working as a CEO at Foods Division.

During the last financial year, there is a significant improvement in production. This improvement is due to the hard work and extra efforts put by the managerial personnel in their individual capacity. The Remuneration Committee has considered their efficiency and decided to revise their remuneration as follows.

rd 11 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Particulars Sri.D.Vijay Smt. Monaa Ms.M.Jayalalitha Sri.M.Sukumar Smt. Lakshmi Anand Kannan C.E.O. Commercial Vijay Anand Vice - President C.E.O. Manager C.E.O.

Salary Rs.29.50 Lakhs Rs.18 Lakhs Rs.18 Lakhs Rs.10 Lakhs Rs.18 Lakhs Per Annum Per Annum Per Annum Per Annum Per Annum

Perquisites a) Contribution to Provident Fund, Superannuation Fund or Annuity Fund to the (for each of extent these either singly or put together are not taxable under the Income Tax the above Act, 1961; persons) b) Gratuity payable at a rate not exceeding half a month’s salary for each completed year of service, and (c) Encashment of leave at the end of the tenure.

Other payments (for each of the above persons) :

(a)Medical benefit for Subject to ceiling of one month salary in a year of service. Reimbursement of Medical expenses actually incurred for self and family :

(c) Club Fees Club Fees subject to a maximum of two clubs. This will not include Admission Fees and Life Membership Fees.

(d)Car To provide a car for use in Company’s business. The same shall not be considered as a perquisite.

(f) Entertainment Expenses Entitled for reimbursement of Entertainment expenses properly incurred for the business of the Company.

All the aforesaid perquisites and other payments are to be restricted to total yearly remuneration prescribed above.

The Board recommends this resolutions set out in Item Nos.9,10,11,12 & 13 for approval of the members.

rd 12 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Item No. 14 Sri. S. Ramesh is an Independent Director of the Company. He joined the Board of Directors of the Company on 08.03.2006. Sri. S. Ramesh is a member of the Nomination and Remuneration Committee, Audit Committee and Share Holders / Investors Grievance Committee of the Company. Sri. S. Ramesh holds Bachelor’s Degree in Commerce and has more than 30 years experience in Finance, Marketing and Production of Food, Leather, Detergent Industries and Civil Projects. In terms of section 149 and any other applicable provisions of the Companies Act, 2013, Sri. S. Ramesh being eligible and offering himself for re-appointment, is proposed to be re-appointed as an Independent Director for second consecutive five years until the conclusion of 28th AGM or upto 30th September 2019 whichever is earlier. In the opinion of the board, Sri. S. Ramesh fulfills the conditions specified in the Companies Act, 2013 and rules made thereunder for his re-appointment as an Independent Director of the Company and is Independent of the Management. Copy of the draft letter for appointment of Sri. S. Ramesh as an Independent Director would be available for inspection without any fee by the members at the Registered Office of the Company during normal business hours on any working day. The Board considers that his continued association would be of immense benefit to the Company and it is desirable to continue to avail services of Sri. S. Ramesh as an Independent Director. Accordingly, the Board recommends the resolution in relation to re-appointment of Sri. S. Ramesh as an Independent Director, not liable to retire by rotation, for the approval by the shareholders of the Company. Except Sri. S. Ramesh, being an appointee, none of the other Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, financial or otherwise, in the resolution set out at Item No.14. This explanatory statement may also be regarded as a disclosure under clause 49 of the listing agreement with the stock exchange.

Item No. 15 Sri. L.A. Irudayaraj is an Independent Director of the Company. He joined the Board of Directors of the Company in 06.07.2007. Sri. L.A. Irudayaraj is the Chairman of the Audit Committee and Nomination and Remuneration Committee and a member of the Share Holders / Investors Grievance Committee of the Company. Sri. L.A. Irudayaraj is a Chartered Accountant and he has more than 42 years of experience as a executive in various established companies like SPIC, TISCO, Jamshedpur, etc., In terms of section 149 and any other applicable provisions of the Companies Act, 2013, Sri. L.A. Irudayaraj being eligible and offering himself for re-appointment, is proposed to be re- appointed as an Independent Director for second consecutive five years until the conclusion of 28th AGM or upto 30th September 2019 whichever is earlier. In the opinion of the board, Sri. L.A. Irudayaraj fulfills the conditions specified in the Companies Act, 2013 and rules made thereunder for his re-appointment as an Independent Director of the Company and is Independent of the Management. Copy of the draft letter for appointment of Sri. L.A. Irudayaraj as an Independent Director would be available for inspection without any fee by the members at the Registered Office of the Company during normal business hours on any working day. The Board considers that his continued association would be of immense benefit to the Company and it is desirable to continue to avail services of Sri. L.A. Irudayaraj as an Independent Director. Accordingly, the Board recommends the resolution in relation to re-appointment of

rd 13 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Sri. L.A. Irudayaraj as an Independent Director, not liable to retire by rotation, for the approval by the shareholders of the Company.

Except Sri. L.A. Irudayaraj, being an appointee, none of the other Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, financial or otherwise, in the resolution set out at Item No.15. This explanatory statement may also be regarded as a disclosure under clause 49 of the listing agreement with the stock exchange.

Item No. 16

The members of the Company at their 9th Annual General Meeting of the Company held on September 29, 2000 had approved by way of an Ordinary Resolution under Section 293 (1)(a) of the Companies Act, 1956 for creation of mortgages/charge/hypothecation on all present and future properties of the Company in favour of lenders.

Under Section 180 of the Act, the above powers of the Board are required to be exercised only with the consent of the company by a Special Resolution. The Ministry of Corporate Affairs (“MCA”) has vide its General Circular No 4/2014 dated March 25, 2014 clarified that the Ordinary Resolution passed under Sections 293(1)(a) of the Companies Act, 1956 would be sufficient compliance of Section 180 of the Act until September 11, 2014. The approval of the Members for the said creation of a mortgage or charge for the said borrowing is therefore now being sought, by way of a Special Resolutions, pursuant to Section 180(1)(a) of the Act.

The Directors recommend the Resolution at Item No.16 of the accompanying Notice for the approval of the Members of the Company.

None of the Directors and Key Managerial Personnel of the Company or their respective relatives is concerned or interested in the passing of the Resolution at Item No.16.

GENERAL INFORMATION 1) Nature of Industry : Manufacturing of Wheat products, Detergents, Minerals and Generation of Wind Power 2) Date of Incorporation/ Commencement of Commercial Production : 01.03.1991 3) In case of new companies, expected date : N.A of commencement of activities as per project approved by financial institutions approving in the prospectus 4) Financial performance based on given : Gross Profit : Rs. 1368 lakhs indicators : Net Profit Rs. 1013 lakhs : Current Ratio : 1.01 5) Export performance and Net foreign exchange collaborations : Nil 6) Foreign Investments or collaborations, if any : Nil

rd 14 23 ANNUAL REPORT 2013-2014 NAGA LIMITED 3 Nil CA 400 June, June, 1947 th October, 2014 October, st 13 1 V. Marikannan V. Sri. L.A. IRUDAYARAJ L.A. Sri. He He has more than 42 in ofexperience years various established companies like SPIC, TISCO, Jamshedpur, etc., ForNAGA LIMITED Company SecretaryCompany 3 Nil Nil (BY ORDERS OF THE BOARD) July, 1966 July, B.Com., Sri. RAMESH Sri. th October, 2014 October, Civil Projects. Civil 9 st 1 He has more than 30 thanmore has He years experiencein Finance, Market of Production and ing Food, Industries Detergent Leather, and Nil Nil 817855 April, 1981 April, March, 2014 th th 11 27 B.E. (Mechanical) B.E. Sri. SOUNDER KANNAN SOUNDER Sri. Experience in Flour Detergents, & Milling Industries for the10years.past KANNAN

2 Nil B.Sc., 1855220 January, 1959 January, August, 2014 th st 1 27 Smt.MAGESWARI Experience in Flour Detergents, & Milling Industries for the34years.past 2 1 6070570 F.M. Tech F.M. August, 2014 November, 1956 November, st th 1 Sri. K.S.KAMALAKANNAN Sri. Experience in Flour Detergents, & Milling Industries for the40years.past 10 Chennai 12.05.2014 : : Date of Birth of Date re-appointment of Date Qualification area specific in Expertise other in held Directorship companies public of Chairmanship / Membership committeesAudit only of (includes theCompanies Public and Shareholders / Investors Committee) Grievance the in held shares of Number Company. Name of Director of Name Details of Directors seeking re-appointment at the Annual General Meeting : Meeting General Annual the at re-appointment seeking Directors of Details 1 2 3 4 5 6 7 8 Place Date

rd 15 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

DIRECTORS’ REPORT TO MEMBERS Your Directors have pleasure in presenting the Twenty Third Annual Report together with the Audited Statements of Accounts for the year ended 31st March, 2014. FINANCIAL RESULTS Financial Results of the Company for the year under review alongwith the figures for previous year are as follows :- (Rupees in Crores) Current year Previous year Particulars 31.03.2014 31.03.2013

Sales 423.30 368.64 Other Income 1.37 1.63 Total Income 424.67 370.27 Total Expenditure 371.81 322.97 Financial Cost 22.74 15.34 Profit before Depreciation and Tax 30.12 31.96 Depreciation & Amortisation 16.44 13.78 Taxation 3.55 4.14 Net Profit 10.13 14.04 Balance brought forward 35.34 20.77 Amount available for appropriation 45.47 36.55 Appropriations: a) Proposed Dividend 0.85 0.85 b) Tax on Dividend 0.14 0.15 c) Transfer to General Reserve 0.21 0.21 d) Balance carried to Balance Sheet 44.27 35.34

OPERATIONS

Your company’s turnover & other income during the year under review is Rs. 424.67 Crores as against Rs.370.27 Crores for the corresponding previous year. There has been an increase of Rs.54.40 Crores amounting to a rise of 14.69 % compared to the previous year.

Your Directors are to report that your Company has earned a net profit after tax of Rs.10.13 Crores, as against a sum of Rs.14.04 Crores during the previous year. There was no commensurate increase in net profit compared to increase in sales turnover due to the higher raw material input cost, increase in indirect expenses and higher depreciation.

Despite the unfavourable economic conditions and the continuous weak global scenario , your company has clocked a higher turnover and has increased the retail reach of the products to the consumer. Having our foot in the essential commodities, your company will perform well in the forthcoming years with sustained increase in retail market share and with more emphasis on the quality products from Naga family.

rd 16 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

SOLAR

Your Company has installed Solar Power Panel with 600 kw capacity during the year under review at the cost of Rs. 6 crores at the Detergents Division, Vedasandur.

DIVIDEND

Your Directors have pleasure in recommending a dividend of 6% on the equity shares of the Company for the year under review.

TRANSFER TO RESERVE

We propose to transfer Rs. 21 lacs to the general reserve. An amount of Rs.187.18 lacs is proposed to be retained in the Statement of General Reserve for the year under review.

PUBLIC DEPOSITS

The Company does not have any public deposits as on 31st March, 2014.

REPORT ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

In terms of the Sexual Harassment of Women at work place (Prevention, Prohibition and Redressal) Act, 2013 which came into force with effect from 23.04.2013, your Directors report that an internal complaints committee at the mill levels had been constituted to look into the cases of possible sexual harassment of women at the work places and take remedial steps for prohibition of such sexual harassment and redressal of the grievance of women workers, if any, and that the presiding officer is a woman employed among the women employees.

The cases of women sexual harassment during the year Nil.

The cases of women sexual harassment pending during the year Nil.

DIRECTORS:

The Board consists of executive and non-executive directors including independent directors who have wide and varied experience in different disciplines of corporate functioning.

Sri. Sounder Kannan, Whole - Time Director, retires by rotation and being eligible, offered himself for reappointment at the ensuing Annual General Meeting.

Pursuant to the provisions section 149 and 152 of Companies Act 2013, the other directors reappointed are Sri.L.A.Irudayaraj and Sri. S. Ramesh as Independent Directors of the Company.

A brief resume, expertise, shareholding in the Company and details of other directorships of these directors as stipulated under clause 49 of the listing agreement with the stock exchange forms part of the notice of ensuing Annual General Meeting.

DIRECTORS’ RESPONSIBILITY STATEMENT:

In terms of Section 217(2AA) of the Companies Act, 1956, your Directors declare:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same.

(ii) that they have selected such accounting policies and applied them consistently and made judgements 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 and of the profit or loss of the Company for that period;

rd 17 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

(iii) 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 safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) that they have prepared the annual accounts on a ‘going concern’ basis. CORPORATE GOVERNANCE The Company has complied with the requirement regarding Corporate Governance as required under Clause 49 of the Listing agreement with the Stock Exchange where the Company’s shares are listed. A report on the Corporate Governance in this regard is made a part of this Annual Report and a Certificate from the Auditors of the Company regarding compliance of the conditions of the Corporate Governance is attached to this report. MANAGEMENT DISCUSSION & ANALYSIS A Management Discussion & Analysis as required under the Clause 49 of the Listing Agreement is annexed and forming part of the Directors’ Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO Particulars pertaining to these matters as required under Section 217(1) (e) of the Companies Act, 1956 are enclosed in the Annexure to this Report. PARTICULARS OF THE EMPLOYEES UNDER SECTION 217 (2A) OF THE COMPANIES ACT, 1956 During the year under review, there are no employees who are drawing a remuneration of Rs.60,00,000 or more per annum or Rs.5,00,000/- or more per month. AUDITORS: The Company’s Auditors M/s D.Sampathkumar & Co., Chartered Accountants, Chennai are retiring at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. COST AUDIT : Cost Audit has become applicable in respect of products manufactured by your Company with effect from financial year 2012-2013. Accordingly, cost audit prepared by Dr. I. Ashok, Cost Accountant, Thirumangalam having Registration No. M/11929 has been submitted for the year 2012-2013. The Cost Auditor has reported that proper cost records, as per the companies (Cost Accounting Records) Rules, 2011 prescribed under clause (d) of sub section (1) of section 209 of the Companies Act, 1956, have been maintained by the Company so as to give true and fair view of the cost of production, cost of sales and margin of the product groups under reference. In the opinion of the Cost Auditor, the said books and records give information required by the Companies Act, 1956, in the manner so required and the same are in conformity with the Cost Accounting Standards issued by the Institute of Cost Accountants of India, to the extent these are found to be relevant and applicable. Cost Audit for the year 2013-2014 is in progress. CORPORATE SOCIAL RESPONSIBILITY As per the Companies Act, 2013 all companies having networth of Rs. 500 crores or more or turnover of Rs. 1000 crores or more or a net profit of Rs. 5 crores or more during any financial year will be required to constitute a Corporate Social Responsibility (CSR) Committe of the Board of Directors comprising three or more directors, atleast one of whom will be an independent director.

rd 18 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Aligning with the guidelines, we have constituted a Committee comprising Dr. K. Venkatachalam (Chairperson), Smt. Mageswari Kannan and Sri. Sounder Kannan. The committee is responsible for formulating and monitoring the CSR policy of the Company.

ACKNOWLEDGEMENTS

The Management continues to maintain cordial relationship with all the employees and wish to place on record the Board’s appreciation of sincere work put in by them.

The Directors wish to place on record their gratitude to the Central & State Governments, TIIC Limited, Axis Bank Ltd, State Bank of India, Karur Vysya Bank, Standard Chartered Bank, Suppliers, Customers and the Shareholders for their continued co-operation and support.

Place : Chennai FOR AND ON BEHALF OF THE

Date : 12.05.2014 BOARD OF DIRECTORS

K.S.KAMALAKANNAN Chairman & Managing Director.

ANNEXURE TO THE DIRECTORS’ REPORT DISCLOSURE OF THE PARTICULARS AS REQUIRED BY THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES 1998. FORM A A. Conservation of Energy : Reduction of power consumption is an ongoing exercise. B. Technology Absorption : In all the divisions latest technology is being absorbed. C. Foreign Exchange Earnings : Rs. Nil D. Foreign Exchange Outgo : Rs. 612.90 lacs

MANAGEMENT DISCUSSION AND ANALYSIS REPORT The Management is keen to improve its rating from “BBB - ” to “BBB ” and later to “BBB +”. In the last four years our rating has been consistent at “BBB- ” and therefore in the current year sufficient effort is to be carried out to move to the next higher rating. Indian ratings has got two main criteria, one for earnings and the other for debt.

Particulars Positive Trigger % Negative Trigger % Naga Limited %

EBIDTA / TO > 11 < 11 12.45

GROSS DEBT / EBIDTA < 3.5 > 4.5 3.19

Company is working on both fronts and is confident of achieving a higher credit rating this financial year.

rd 19 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

SEGMENT WISE AND PRODUCT WISE PERFORMANCE

The necessary information has been furnished under Note No. 37 of Financial Statements forming part of the Annual Report.

OUTLOOK

The outlook is viewed with optimism, in as much as the economic scenario is poised to improve.

RISK AND CONCERNS

Fluctuation in the raw material prices will directly affect the cost of production.

INTERNAL CONTROL SYSTEMS

The Company has an Audit Committee which looks into the aspects of internal control systems and ensures that all is well with the systems in vogue.

FINANCIAL AND OPERATIONAL PERFORMANCE

The financial statements have been prepared in accordance with the requirements of the Companies Act, 1956 and applicable Accounting Standards issued by the Institute of Chartered Accountants of India. The management accepts the integrity and objectivity of these financial statements as well as the various estimates and judgements as used therein. The estimates and judgements relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect in true and fair manner, the form of transactions and reasonably present the Company’s state of affairs and profit for the year.

HUMAN RESOURCE AND INDUSTRIAL RELATIONS

The industrial relations, by and large, were cordial and the management believes that the main strength of its organization is its people.

CAUTIONARY STATEMENT

Certain statements made in the Management Discussion and Analysis Report relating to the Company’s objectives, projections, outlook, expectations, estimates, etc., may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations, projections, etc., whether expressed or implied. Several factors could make significant difference to the company’s operations. These include climatic conditions and economic conditions affecting demand and supply, government regulations and taxation, natural calamities, etc., over which the Company does not have any direct control.

REPORT ON CORPORATE GOVERNANCE

1. COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE :

Corporate Governance is associated with the systems and process with a view to enhancing the long term shareholders value in a transparent and equitable manner. This process transcends mere disclosures and statutory compliance and aims at developing and strengthening the relationship with the investors and public at large. The salient features of good Corporate Governance are transparency, accountability, fairness and social responsibility.

rd 20 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Moving forward from last year, your company continues to develop its process and procedures and also has made Corporate Governance as a practice. Your Company also believes that the very foundation of Corporate Governance is disclosure, as openness is the basis of public confidence in the corporate system.

2. a) Composition of the Board of Directors :

The present strength of the Board of Directors is 6 who are categorized under the following heads:

1. Promoter, Executive Director (PED) ………. 3 Nos

2. Independent, Non- Executive Director (INED) ………. 3 Nos

Composition of the present Board of Directors and also the Directorship on other Companies or Board Committees of which he / she is a member/Chairperson are as under:

Name of Director Category No. of other No. of membership No. of Board Directorship of other Committees for Board Committees which Chairperson

Sri. K.S.Kamalakannan PED 3 1 NIL Smt. Mageswarikannan PED 4 3 NIL Sri. Sounderkannan PED 1 1 NIL Sri. L.A.Irudayaraj INED NIL 3 3 Sri. S. Ramesh INED NIL 3 NIL Dr. K. Venkatachalam INED 2 2 1 b) No. of Board Meetings held: During the financial year ended 31st March, 2014, TEN Board meetings were held on 15.05.2013, 04.06.2013, 03.08.2013, 23.08.2013, 25.09.2013, 25.10.2013, 26.11.2013, 06.12.2013, 10.02.2014 and 27.03.2014. c) The attendance of each Director at Board meetings and the Twenty Second Annual General Meeting (AGM) is as under:

Name of Director No. of Board Attendance at last AGM Remarks Meetings attended held on 03.08.2013

Sri. K.S. Kamalakannan 10 Yes NIL Smt. Mageswari Kannan 10 Yes NIL Sri. Sounder Kannan 9 Yes NIL Sri. L.A. Irudayaraj 4 Yes NIL Sri. S. Ramesh 10 Yes NIL Dr. K. Venkatachalam 4 Yes NIL

rd 21 23 ANNUAL REPORT 2013-2014 NAGA LIMITED d) Code of Conduct : The Members of the Board and the Senior Management shall: 1) Always act in the best interest of the Company and its stakeholders; 2) Adopt the highest standards of professional ethics, integrity, confidentiality and discipline in dealing with all matters relating to the Company; 3) Always adhere and conform to the various statutory and mandatory regulations/guidelines applicable to the operations of the Company avoiding violation; 4) Not to derive personal benefit or undue advantages, financial or otherwise, by virtue of their position or relationship with the Company; 5) Inform the Company immediately if there is any personal development which could be incompatible with the level and stature of his/her position and responsibility with the Company; and 6) Always abide by the above Code of Conduct and shall be accountable to the Board for their action, violations, defaults etc., e) Audit Committee :

The powers, role and terms of reference of the Audit Committee covers the areas as contemplated under clause 49 of the listing agreement and section 292 A of the Companies Act 1956 besides other terms as may be referred by the Board of Directors. The powers include investigating any activity within terms of reference; seeking information from any employee; obtaining outside legal and other professional advice ; and securing attendance of outsiders with relevant expertise, if considered necessary. The role includes oversight of company’s financial reporting process and disclosure of financial information to ensure that the financial statement is correct, sufficient and credible; recommending the appointment, reappointment, if required, replacement or removal of statutory and cost auditors; fixation of audit fees and approval of payment for any other services; discussing with internal auditors any significant finding and followup thereon; reviewing with the management annual and quarterly financial statements before submission to the Board for approval, adequacy of internal control systems and performance of statutory and internal auditor; and reviewing the company’s financial risk and management policies.

th The committee has been reconstituted on 12 May, 2014 and presently the Committee comprises of Sri.L.A.Irudayaraj, Non-Executive and Independent Director and is the Chariman of the Audit Committee, Sri.S.Ramesh, Non-Executive and Independent Director and Smt.Mageswari Kannan, Joint Managing Director / Promoter and Executive Director. All members of the Audit Committee are financially literate, and Sri. L.A. Irudayaraj, Sri. S. Ramesh and Smt. Mageswari Kannan, have financial management expertise by virtue of their comparable experience and background and Sri. V. Marikannan, Company Secretary, acts as the Secretary to the Committee. The heads of finance and Accounts are permanent invitees to the meetings of the Audit Committee. The head of internal audit, the concerned authorised representatives of the statutory auditors are also invited to the meetings of the Audit Committee.

The Audit Committee has recommended to the Board, the reappointment of M/s. D. Sampathkumar & Co., Chartered Accountants as the statutory auditors of the Company and the necessary resolutions for their reappointment are placed before the shareholders at the rd 23 Annual General Meeting.

rd 22 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

During the last financial year, the Audit Committee met 4 times on 15.05.2013, 03.08.2013, 25.10.2013 and 10.02.2014. The Committee at these meetings reviewed the financial reporting system and un-audited financial results for the relevant periods. The committee also assessed the internal control system and to this end examined the observations and suggestions of the internal auditors with regard to operations of the Company and found them to be in order.

nd Sri.L.A. Irudayaraj, Chairman of the Audit Committee was present at the 22 AGM held on 03.08.2013. f) SHAREHOLDERS’ COMMITTEE : i) SHAREHOLDERS / INVESTORS GRIEVANCE COMMITTEE :

The Shareholders’ / Investors Grievance Committee oversees redressal of shareholder and investor grievances relating to transfer / transmission of shares, issue of duplicate shares, recording dematerialisation / rematerialisation of shares and related matters.

Sri.L.A.Irudayaraj, a non executive and independent director, is the chairman of the shareholder / investor grievance committee and Sri. S. Ramesh a non executive and independent director. Sri. V. Marikannan, Company Secretary acts as the compliance officer to the committee.

However there was no complaint from any share holder during financial year 2013 - 2014. ii) SHARE TRANSFER COMMITTEE

Share Transfer Committee consists of the members of Sri.K.S.Kamalakannan, Chairman & Managing Director and Smt.Mageswari Kannan, Joint Managing Director. The Committee deals with all matters connected with share transfers, transmission, issue of duplicate share certificates, transposition, demat / remat etc., iii) COMPLIANCE OFFICER

In term of clause 47 of the listing agreement, Sri. V. Marikannan is the Company Secretary and the compliance officer during the period under review for the purpose of complying with the various provisions of SEBI, Stock exchange etc., and can be contacted at M/s. Naga Limited, No.1, Anna Pillai Street, Chennai - 600 001, Tel : 044-25363535, e-mail id : marikannanv@nagamills. com. g) NOMINATION AND REMUNERATION COMMITTEE :

The Board of Directors in its meeting held on 12th May 2014, reconstituted the Remuneration / Selection Committee and name has been changed as the Nomination and Remuneration Committee. Sri. L. A. Irudayaraj, non executive independent director is the Chairman of the Committee and Sri S.Ramesh, Dr. K. Venkatachalam, non executive independent directors are the members of the Nomination and Remuneration Committee. Sri. K.S. Kamalakannan, Chairman & Managing Director and Smt.Mageswari Kannan, Joint Managing Director and Sri . Sounder Kannan, Whole-Time Director are permanent invitees to the committee meetings. Sri. V. Marikannan, Company Secretary is the secretary of the committee.

The terms of reference of the Committee, inter alia, includes (a) formulation of policy for determining qualifications, positive attributes and independence of a director and remuneration for the directors, Key Managerial Personnel and other employees and recommending the same to the Board and (b)identification of persons who are qualified to become directors and who may be appointed in senior management in accordance with the

rd 23 23 ANNUAL REPORT 2013-2014 NAGA LIMITED criteria as per the policy approved by the board. The policy of the company is to remain competitive in the industry to attract and retain the best talent and appropriately reward employees for their individual performance and contribution to the business.

During the year under review, matters of remuneration of executive directors, Key and Senior Managerial Personnel and relatives of interested directors were considered by the Board of Directors of the Company, with the interested executive directors, not participating or voting. Further, the terms of remuneration of executive directors, Key & Senior Managerial Personnel and revision of remuneration of relatives of the interested directors are approved by the shareholders at the Annual General Metting.

The Company does not have any Employee Stock Option Scheme. a) DIRECTORS REMUNERATION :

The details of remuneration paid to the Executive Directors during the financial year 2013- 2014 are furnished hereunder, in addition to Notes on Accounts.

Particulars Sri. K.S.Kamala Smt.Mageswari Sri.Sounder Kannan Kannan Kannan (C.M.D) (J.M.D) (W.T.D)

A. Fixed Component : 1. Salary Rs.42,00,000/- Rs.39,00,000/- Rs.36,00,000/- 2. Contribution to Provident Fund Rs. 9,360/- Rs. 9,360/- Rs. 9,360/- 3. Commission Rs.10,13,000 /- Rs.10,13,000 /- Rs.10,13,000 /- B. Variable Component NIL NIL NIL C. Stock Options NIL NIL NIL D. No.of Shares Held as on 31.03.2014 60,70,570 18,55,220 8,17,855 b) None of the non-executive directors of your company has any pecuniary relationship or transactions with the company. They are paid only sitting fees. Non executive directors, except Sri. L.A. Irudayaraj who is holding 400 equity shares of Rs. 10/- each of the company, hold no equity shares and convertible instruments of the company.

As required, a brief profile and other particulars of the Directors seeking re-appointment are rd given in the Notice of the 23 Annual General Meeting and forms part of the Corporate Governance report. h) CORPORATE SOCIAL RESPONSIBILITY COMMITTEE (CSR)

The Board of directors in its meeting held on 12th May 2014 constituted a Corporate Social Responsibility Committee. Dr.K.Venkatachalam, Independent Director is the Chairman of the Committee, Smt. Mageswarikannan, Joint Managing Director and Sri. Sounderkannan, Wholetime Director are members of the Committee. Sri.V.Marikannan, Company Secretary is the Secretary of the Committee.

rd 24 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

3) ANNUAL GENERAL MEETINGS :

Year Date Time Venue

2010-2011 25.07.2011 10.15 A.M Presidency Club, 2011-2012 02.08.2012 10.30 A.M No.51, Ethiraj Salai, 2012-2013 03.08.2013 10.45 A.M Egmore, Chennai-8

4) DISCLOSURE :

1. None of the transactions with related parties, were in conflict with interest of the Company. Attention of members is drawn to the disclosure of transactions with related parties in Note No.34 of Notes of Financial Statements forming part of the Annual Report.

2. There were no instances of non-compliance by the company on any matter related to the capital markets during the last three years and hence no penalties and strictures have been imposed on the Company by Stock Exchange or SEBI or any statutory authorities.

3. The Company has a Whistle Blower Policy wherein the employees enjoy access by reporting to the Audit Committee.

4. All the mandatory requirement has been complied by the Company and also adopted some of the non-mandatory requirements of Clause 49.

5. The statutory Financial Statements of the Company are unqualified.

5. MEANS OF COMMUNICATION :

Financial results of the Company are published in “Business Line” and in “Malai Sudar” (Vernacular) in Chennai.

6. GENERAL SHARHOLDERS INFORMATION :

st 1. Annual General Meeting : 1 August, 2014 Date Time and Venue : 12.15 P.M. at the Presidency Club, 51, Ethiraj Salai, Egmore,Chennai-08.

th st 2. Book Closure dates : 29 July, 2014 to 1 August, 2014 (both days inclusive)

3. Listing of Equity Shares on : Madras Stock Exchange Limited, Chennai. Stock Exchanges Listing Fees have been paid up to date.

4. Share Transfer System : Share Transfer requests are processed and the share certificates are returned within a period of 15days

5. Distribution of Shareholding : Promoters - 74.69 % as on 31.03.2014 Others - 25.31 %

rd 25 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

6. Dematerialisation of Shares : 98.82 % equity shares of the Company have st been dematerialised as on 31 March, 2014.

7. Units Location : 1. No.1, Trichy Road, Dindigul-624 005 2. No.133, Trichy Road, Dindigul-624 005 3. No.1, Modern Nagar, Karur Road, Dindigul-624 005. 4. No.9, Trichy Road, Dindigul-624 005 5. No.1, Oddanchatram Road, Vedasandur- 624 710

8. Address for Investor : Naga Limited, No.1, Anna Pillai Street, Correspondence Chennai- 600 001. Telefax 044-25363535

9. Connectivity with NSDL : ISIN No. INE327M01014

10. Address of Registrar & : Cameo Corporate Services, Transfer Agent Subramanian Buildings, Club House Road, Anna Salai, Chennai 600 002.

Place : Chennai FOR AND ON BEHALF OF THE Date : 12.05.2014 BOARD OF DIRECTORS

K.S. KAMALAKANNAN Chairman & Managing Director

rd 26 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

CERTIFICATE BY C E O & C F O We, K.S.Kamalakannan, Chairman & Managing Director (CEO) and Mageswari Kannan, Joint Managing Director (CFO) of M/s NAGA LIMITED certify that: a) We have reviewed the Financial Statements and the Cash Flow Statements for the year ended 31.03.2014 and that to the best of our knowledge and belief: (i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading. (ii) These statements give a true and fair view of the state of affairs of the Company and of the results of operations and cash flows. The financial statements have been prepared in conformity, in all material respect, with the existing generally accepted accounting principles including Accounting Standards, applicable laws and regulations. (b) There are to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Company’s code of conduct. (c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and we have disclosed to Auditors and Audit Committee, deficiencies in the design, or operation of such internal controls if any, of which we are aware and this steps we have taken or proposed to take to rectify these deficiencies. (d) We have disclosed, based on our evaluation wherever applicable to the Auditors and Audit Committee that ; 1. There were no material deficiencies in internal control over financial reporting during the year. 2. All the significant changes in Accounting Policies during the year, if any, have been disclosed in the notes to the financial statements; and 3. There were no instances of significant fraud of which we are aware and the involvement there in, of the management or an employee having the significant role in the Companies internal control system over financial reporting.

PLACE : CHENNAI K.S. KAMALAKANNAN MAGESWARI KANNAN DATE : 12.05.2014 C.E.O. (C.M.D) C.F.O. (J.M.D)

8. DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNEL WITH THE COMPANY’S CODE OF CONDUCT This is to confirm that the Company has adopted a Code of Conduct to be followed by all the members of the Board and Senior Management Personnel of the company respectively in compliance with the revised Clause 49 of the Listing Agreement with stock exchange where the shares of the Company are listed.

As provided under Clause 49 of the Listing Agreement all Board Members and Senior Management Personnel have affirmed the compliance with the Code of Conduct for the year ended 31st March, 2014.

PLACE : CHENNAI K.S. KAMALAKANNAN DATE : 12.05.2014 C.E.O. (C.M.D)

rd 27 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

AUDITOR’S CERTIFICATE ON CORPORATE GOVERNANCE

To the Members of M/s. Naga Limited

We have examined the compliance of conditions of Corporate Governance by Naga Limited, for the year ended 31st March, 2014 as stipulated in Clause 49 of the Listing Agreement of the said Company with Stock Exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been limited to a review of the procedures and implementation thereof, adopted by the Company for ensuring compliance with the conditions of the compliance of Corporate Governance as stipulated in the said clause. 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 and the representations made by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in clause 49 of the above mentioned Listing Agreement.

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

Place : Chennai For D.Sampath Kumar & Co Date : May 12, 2014 Chartered Accountants (Firm Registration No.003556S)

M K Ravindran (Partner) M.N. 020887

rd 28 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

D.Sampathkumar & Co., 5, South Boag Road, Chartered Accountants T.Nagar, Chennai 600 017. Ph: 044-24341189

INDEPENDENT AUDITORS’ REPORT

The Members of Naga Limited

Report on the Financial Statements

We have audited the accompanying financial statements of M/s. Naga Limited, (“the Company”), which comprises the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies th Act, 1956 (the Act) read with the General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

rd 29 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(b) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that;

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(c) The Balance Sheet, statement of profit and loss, and cash flow statements dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statements comply with the Accounting Standards notified under the Act read with th the General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

(e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of subsection (1) of section 274 of the Act.

Place : Chennai For D.Sampathkumar & Co Date : May 12, 2014 Chartered Accountants (Firm Registration No.003556S)

M K Ravindran (Partner) M.No. 020887

rd 30 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Annexure to Independent Auditors’ Report (Referred to in paragraph 1 under the heading of “Report on Other Legal and Regulatory Requirements” of our report of even date to the members of M/s. Naga Limited., on the Financial Statement for the year ended March 31, 2014) i) In respect of Fixed Assets: a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information. b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such physical verification. c) In our opinion, the company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the company is not affected ii) In respect of its Inventories: a) The inventories has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. c) The company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to book records. iii) In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms, or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 : a) The company has not granted any loans, secured or unsecured to Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (a), (iii) (b) and (iii) (c) of paragraph 4 of the Order are not applicable. b) 1) The Company has taken unsecured loans from five of the parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.1,308.66 Lacs. The year end balance of that loan was Rs.1,308.66 Lacs. 2) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of the loans taken by the company are not prima facie prejudicial to the interest of the company. 3) The terms of arrangement do not stipulate any repayment schedule and is repayable on demand. Accordingly, paragraph 4(iii) (c) of the Order is not applicable to the Company in respect of repayment of principal amount; 4) In respect of the said loans, they are repayable on demand and therefore, the question of overdue amount does not arise. In respect of interest, there are no overdue amounts. iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control systems commensurate with the size of the company and the nature

rd 31 23 ANNUAL REPORT 2013-2014 NAGA LIMITED of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system of the Company. v) In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956 : a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that need to be entered in the Register maintained under Section 301 of the Companies Act, 1956 have been so entered. b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs.5 Lacs in respect of each party during the year have been made at prices which appear reasonable as per the information available with the company. vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public. Therefore, the provisions of Clause (vi) of Paragraph 4 of the Order are not applicable to the Company. vii) In our opinion the company has an internal audit system commensurate with its size and the nature of its business. viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have however not made a detailed examination of the cost records with view to determine whether they are accurate or complete. ix) In respect of statutory dues : a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues were outstanding as at 31st March, 2014 for a period of more than six months form the date of becoming payable. b) According to the information and explanations given to us and the records of the company examined by us, except the following, there are no dues of Income tax, wealth tax, service tax, sales tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

Name of the Nature of Amount Involved Period to which Dispute is State Act Dues Rs. in lacs the case relates pending before

Finance Act Service tax 304.00 2006-2010 CESTAT / 1994 Commissioner (Appeals)

Sales Tax Act Sales Tax 39.60 2007-2008 Commissioner 2010-2011 (Appeals)

rd 32 23 ANNUAL REPORT 2013-2014 NAGA LIMITED x) The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year. xi) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions and banks. xii) In our opinion and according to the explanations given to us and based on the information available, no loans and advance have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities. xiii) In our opinion, the company is not chit fund or nidhi / mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company. xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4 (xiv) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the company. xv) The company has given guarantee for loan taken by others from banks or financial institution. In our opinion, the terms and conditions on which the guarantees given are not prima facie prejudicial to the interest of the Company. xvi) On the basis of review of utilization of funds on an overall basis, in our opinion, the term loans taken by the Company were applied for the purposes for which the loans were obtained. xvii) On the basis of review of utilization of funds on an over all basis, in our opinion, the funds raised on short term basis have not been used for long term investment. xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. xix)The company has not issued any debentures during the year. xx) The company has not raised any money by way of public issues during the year. xxi) In our opinion and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

Place : Chennai For D Sampathkumar & Co., Date : May 12, 2014 Chartered Accountants (Firm Registration No : 003556S)

M.K. Ravindran (Partner) M.No: 020887

rd 33 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

BALANCE SHEET AS AT 31ST MARCH, 2014 (Rs. in Lacs) Note As at 31st As at 31st PARTICULARS No March, 2014 March, 2013 I. EQUITY AND LIABILITIES (1) Shareholders’ Fund (a) Share Capital 2 1,424.80 1,424.80 (b) Reserves and Surplus 3 4,760.71 3,846.90 (2) Share application money pending allotment -- -- (3) Non-Current Liabilities (a) Long-Term Borrowings 4 8,662.01 8,641.81 (b) Deferred Tax Liabilities (net) 5 596.93 546.93 (c) Other Long -Term Liabilities 6 123.95 129.83 (4) Current Liabilities (a) Short-Term Borrowings 7 6,334.00 6,751.32 (b) Trade Payables 8 1,223.38 478.50 (c) Other Current Liabilities 9 2,279.95 2,064.00 (d) Short-Term Provisions 10 102.36 103.67 Total 25,508.09 23,987.76 II. ASSETS (1) Non -Current Assets (a) Fixed Assets (i) Tangible Assets 11 14,250.85 14,048.30 (ii) Intangibles 11 36.65 61.21 (iii) Capital Work in Progress 11 751.20 122.49 (b) Non - Current Investments 12 64.25 64.25 (c) Long -Term Loans and Advances 13 311.84 192.36 (d) Other Non - Current Assets 14 13.57 15.29 (2) Current Assets (a) Inventories 15 6,293.31 6,869.71 (b) Trade Receivables 16 3,023.91 1,837.10 (c) Cash and Cash Equivalents 17 473.63 455.01 (d) Short-Term Loans and Advances 18 231.77 286.79 (e) Other Current Assets 19 57.11 35.25

Total 25,508.09 23,987.76 Significant Accounting Policies & Notes on Financial Statements - 1 to 38 As per our report of even date For and on behalf of the Board For D Sampathkumar & Co., Chartered Accountants (Firm Registration No : 003556S)

M.K. RAVINDRAN K.S. KAMALAKANNAN MAGESWARI KANNAN V. MARIKANNAN Partner Chairman & Managing Joint Managing Director Company Secretary M.No: 020887 Director Place : Chennai Date : May 12, 2014

rd 34 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED 31ST MARCH, 2014

(Rs. in Lacs) Note PARTICULARS No 2013 - 2014 2012 - 2013 INCOME I Revenue from Operations 20 42,329.85 36,863.88 II Other Income 21 137.17 163.02

III Total Revenue (I + II) 42,467.02 37,026.90

IV EXPENSES Cost of Materials Consumed 22 29,401.50 24,330.18 Purchases of Stock in-Trade 23 1,607.51 2,673.15 Changes in Inventory of Finished Goods, Work - in - progress and Stock in Trade 24 86.51 (281.59) Employee Benefits Expense 25 1,841.30 1,558.30 Finance Costs 26 2,274.37 1,534.34 Depreciation and Amortisation Expense 11 1,644.42 1,378.10 Other Expenses 27 4,243.74 4,016.98

Total Expenses 41,099.35 35,209.46

V PROFIT BEFORE TAX 1,367.67 1,817.44 VI Tax Expenses 1) Current Tax 304.50 363.63 2) Deferred Tax 50.00 50.00

VII PROFIT FOR THE YEAR 1,013.17 1,403.81

VIII Earnings per Equity Share of Face Value of Rs. 10 each

Basic and Diluted (in Rs.) 7.11 9.85

Significant Accounting Policies & Notes on Financial Statements - 1 to 38

As per our report of even date For and on behalf of the Board For D Sampathkumar & Co., Chartered Accountants (Firm Registration No : 003556S)

M.K. RAVINDRAN K.S. KAMALAKANNAN MAGESWARI KANNAN V. MARIKANNAN Partner Chairman & Managing Joint Managing Director Company Secretary M.No: 020887 Director Place : Chennai Date : May 12, 2014

rd 35 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

NOTE - 1 : SIGNIFICANT ACCOUNTING POLICIES:

a) Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with Generally Accepted Accounting Principles accepted in India and complied with the accounting standards notified by Central Government of India, under the Companies (Accounting standards) Rules 2006, and relevant provisions of the Company’s Act, 1956.

b) Uses of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

c) Revenue Recognition:

i.Income: Revenue is recognised only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from sales is recognised on despatch of goods and net of excise duty, service tax, trade discounts where applicable. Power generated through windmill is valued as per the credits given in the regular power bills by Tamil Nadu Generation and Distribution Corporation Limited. Other Incomes are recognised on accrual basis.

ii.Expenditure: Expenses are accounted on accrual basis and provision is made for all known losses and liabilities.

d) Fixed Assets :

Fixed Assets are stated at cost of acquisition or construction, net of cenvat credit and ,depreciation. Cost include direct costs and financing cost related to borrowing attributable to acquisition that are capitalized until the assets are ready for use. Capital- work-in-progress comprise outstanding advances paid to acquire fixed assets and the cost of fixed assets that are not yet ready for their intended use at the reporting date. Intangible assets recorded in the books are shown less of accumulated amortisation and impairment.

e) Depreciation and Amortisation :

Depreciation is provided on written down value method in respect of Soaps and Detergents Division at Vedasandur and under the straight line method in respect of other divisions at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

rd 36 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

f) Impairment of Assets:

An impairment of loss is charged to the profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

g) Foreign Currency Transactions:

i. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction or that approximates the actual rate at the date of the transaction.

ii. Monetary items denominated in foreign currency at the year end are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognized as exchange difference and the premium paid on forward contracts is recognized over the life of the contract.

iii. Non monetary foreign currency items are carried at cost.

iv. Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss account except in case of long term liabilities, where they related to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

h) Investments:

Current investments are carried at the lower of cost and quoted / fair value, computed category wise . Long term investments are stated at cost. Provisions for diminution in the value of long term investments is made only if such a decline is other than temporary.

i) Inventories:

Items of inventories are measured at lower of cost and net realizable value after providing for obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition. Cost of raw materials, process chemicals, stores and spares, packing materials, trading and other products are determined on First In First Out basis.

j) Employee Benefits

i. Short term Employee Benefits are recognized as an expense at the undiscounted amount in the Profit and Loss Account of the year in which the related service is rendered.

ii. Post employment and other long term employees benefits are recognised as an expense in the Profit and Loss Account for the year in which employee has rendered services. The expense is recognised at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Profit and Loss Account.

rd 37 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

k) Borrowing Cost:

Borrowing cost that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying assets is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss Account.

l) Government Grants:

i. Government grants are recognised when there is resonable assurance that the company will comply with the conditions with attached to them and the grants will be received.

ii. Government grants whose primary condition is that the company should purchase, construct or other wise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognised as income over the life of the depreciable asset by way of a reduced depreciation charge.

m) Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from “timing difference” between taxable and accounting income is accounted for using tax rates and laws that are enacted or substantially enacted as on the balance sheet date. Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

n) Provision, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when, there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

(Rs. in lacs) Particulars As at As at 31.03.2014 31.03.2013 NOTE - 2 : SHARE CAPITAL

AUTHORISED : 2,75,00,000 (PY 2,75,00,000) Equity Shares of Rs 10/- each 2,750.00 2,750.00

ISSUED, SUBSCRIBED & FULLY PAID UP: 1,42,48,000 (PY 1,42,48,000) Equity Shares of Rs10/- each 1,424.80 1,424.80 (Of the above shares 98,01,000 Equity Shares were allotted pursuant to scheme of amalgamation for consideration other than cash)

The Company has issued only one class of equity shares having par value of Rs.10 per share.

rd 38 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

As at 31st As at 31st PARTICULARS March, 2014 March, 2013

Details of shareholders holding more than 5% shares.

NAME OF As at 31st March, 2014 As at 31st March, 2013 SHAREHOLDERS No. of Shares % of holding No. of Shares % of holding

Sri. K.S. Kamalakannan 6070570 42.61 6059070 42.53 Smt. Mageswarikannan 1855220 13.02 1756500 12.33 M/s. Naga Global Holding (India) Ltd., 1350725 9.48 1339500 9.40 M/s. Lakme Investments & Finance Ltd., 1165895 8.18 1159900 8.14 M/s. M.M.Detergents Company (P) Ltd., 1024000 7.19 1100000 7.72 Sri. Sounderkannan 817855 5.74 817855 5.74

The reconciliation of the number of shares : (Rs.) Particulars As at 31.03.2014 As at 31.03.2013

No. of Shares outstanding at the beginning of the year 1,42,48,000 1,42,48,000 No. of Shares outstanding at the end of the year 1,42,48,000 1,42,48,000

NOTE - 3 : RESERVES & SURPLUS (Rs. in Lacs)

CAPITAL RESERVE As per Last Balance Sheet Total - A 10.82 10.82

SECURITIES PREMIUM RESERVE As per Last Balance Sheet 136.11 136.11

Total - B 136.11 136.11 GENERAL RESERVE As per Last Balance Sheet 166.18 145.18 Add : Transferred from Profit & Loss Account 21.00 21.00 Total - C 187.18 166.18

PROFIT & LOSS ACCOUNT As per Last Balance Sheet 3,533.79 2,076.54 Add : On Amalgamation -- 174.46 Add : Profit for the Year 1,013.17 1,403.81

4,546.96 3,654.81

rd 39 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

(Rs. in Lacs)

As at 31st As at 31st PARTICULARS March, 2014 March, 2013

Less : Appropriations Transferred to General Reserve 21.00 21.00 Proposed Dividend on Equity Shares 85.49 85.49 Tax on Dividend 13.87 14.53 Total - D 4,426.60 3,533.79

Total - A+B+C+D 4,760.71 3,846.90

NOTE - 4 : LONG TERM BORROWINGS

SECURED Term Loans from Banks 6,654.65 6,119.20 Term Loans from Financial Institutions and Others 2.59 468.26 Total - A 6,657.24 6,587.46 UNSECURED

Term Loans from Financial Institutions and Others 696.11 748.37 Loans and Advances from Related Parties 1,308.66 1,305.98 Total - B 2,004.77 2,054.35 Total - A+B 8,662.01 8,641.81

Security & Other terms of loans

Term loan from Axis Bank Ltd amounting to Rs. 3897.87 lacs outstanding as at 31.03.2014 (Previous year Rs. 4567.93 lacs) is primarily secured on the assets located at Food Division. Mineral Division and Detergents Division located at Dindigul District and further collaterally secured on land at Kulathoor and Velvarkottai.

Term loan from Tamilnadu Industrial Investment Corporation Ltd., amounting to Rs. Nil outstanding as at 31.03.2014 (previous year Rs. 839.83 lacs)

Term loan from Standard Chartered Bank amounting to Rs. 1,809.07 lacs outstanding as at 31.03.2014 (Previous year Rs. 1507.90 Lacs) is primarily secured on assets purchased under the loan and Land Measuring 4.01 Acres at Vedasandur. External commercial borrowings is fully hedged.

Term loan from ICICI Bank Ltd amounting to Rs.91.51 Lacs outstanding as at 31.03.2014 (Previous year Rs. 133.38 Lacs) is primarily secured on assets purchased under the loan.

rd 40 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

(Rs. in Lacs)

As at 31st As at 31st PARTICULARS March, 2014 March, 2013

Term loan from HDFC Bank Ltd amounting to Rs. 652.85 Lacs outstanding as at 31.03.2014 (Previous year Rs. 729.29 Lacs) is primarily secured on the assets of the company located at Trichy.

Term loan from Tata Capital Ltd amounting to Rs. 9.82 Lacs outstanding as at 31.03.2014 (Previous year Rs. 16.87 Lacs) is primarily secured on the assets purchased under the loan.

Term loan from The Karur Vysya Bank Ltd amounting to Rs. 1575 Lacs outstanding as at 31.03.2014 (Previous year Rs. 575 Lacs ) is primarily secured on the Twin Theatre and Agri Godown located at Dindigul.

Term loan from Canara Bank amounting to Rs. 483.36 Lacs outstanding as at 31.03.2014 (Previous year Nil ) is primarily secured on Solar System located at Dindigul.

Unsecured Term Loan from Bajaj Finance Ltd amounting to Rs. 750.34 Lacs outstanding as at 31.03.2014 (Previous year Rs.803.68 Lacs) is personally guaranteed by the some of the directors.

Note :

a) The said loans are repayable in monthly / quarterly instalments

b) The Company does not have any continuing default as on the Balance Sheet date in the repayment of loan or interest.

NOTE - 5 : DEFERRED TAX LIABILITIES (NET)

Opening Balance 546.93 446.93 Related to Fixed Assets / Disallowances under Income Tax Act, 1961 50.00 50.00 On amalgamation -- 50.00

596.93 546.93

NOTE - 6 : OTHER LONG TERM LIABILITIES

Others 123.95 129.83

123.95 129.83

rd 41 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

(Rs. in Lacs)

As at 31st As at 31st PARTICULARS March, 2014 March, 2013

NOTE - 7 : SHORT TERM BORROWINGS Secured (Secured by pari passu charge on inventories & Trade Receivables) From Banks 5,834.00 6,751.32 Un Secured From Banks 500.00 -- (Secured on personal guarantee of some of the Directors of the Company)

6,334.00 6,751.32

NOTE - 8 : TRADE PAYABLES Trade Payables 1,223.38 478.50

1,223.38 478.50

The Company is in the process of compiling relevant information from its suppliers about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. Since the relevant information is still not available, no disclosures have been made in the accounts.

NOTE - 9 : OTHER CURRENT LIABILITIES

Current Maturities of Long Term Debts 1,914.97 1,838.15 Advances Received for Supply of Goods 18.46 54.45 Balances in Current Account with Banks 93.30 40.58 Others 253.22 130.82

2,279.95 2,064.00

NOTE - 10 : SHORT TERM PROVISIONS

Provision for Superannuation / Gratuity / Leave Encashment 3.00 3.65 Proposed Dividend 85.49 85.49 Tax on Proposed Dividend 13.87 14.53 102.36 103.67

rd 42 23 ANNUAL REPORT 2013-2014 NAGA LIMITED 14.86 61.21 628.63 739.71 432.93 111.61 122.49 As at 2,095.52 7,529.41 2,495.63 9,639.78 14,048.30 14,109.51 31.03.2013 4 (Rs. in Lacs.) NetBlock 18.19 36.65 844.63 703.42 391.74 125.12 751.20 As at As 2,134.55 7,193.15 2,840.05 14,250.85 14,287.50 14,109.51 31.03.201 - 28.62 73.68 453.32 395.92 347.06 As at 1,049.64 4,736.69 1,498.81 8,510.06 8,583.74 6,947.69 31.03.2014 ------8.37 8.37 8.37 ments / Adjust- / Deductions - 1.85 94.56 49.62 24.56 153.14 104.44 215.18 Additions 1,001.07 1,619.86 1,644.42 1,378.10 - DepreciationAmortisation/ 26.77 49.12 896.50 348.88 309.73 297.44 3,735.62 1,283.63 6,898.57 6,947.69 5,569.59 As at 01.04.2013 46.81 844.63 787.66 472.18 110.33 As at 3,184.19 1,156.74 4,338.86 11,929.84 22,760.91 22,871.24 21,057.20 31.03.2014 ------10.87 10.87 10.87 ments / Adjust- / Deductions - 5.18 GrossValue 68.15 55.87 63.13 216.00 192.17 664.81 559.60 1,824.91 1,824.91 5,240.45 Additions 41.63 628.63 742.66 409.05 110.33 2,992.02 1,088.59 3,779.26 As at 11,265.03 20,946.87 21,057.20 15,816.75 01.04.2013 Assets

Description Tangible Land Building & Plant Equipments Electrical Installation Furniture& Fixtures Vehicles Others Windmill Total (A) Intangible Assets Goodwill(B) A+B Total Previousyears 1 a b c d e f g h 2 CapitalWorkin progress NOTE - 11 : FIXED ASSETS FIXED : 11 - NOTE

23rd ANNUAL REPORT 2013-2014 43 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014 (Rs. in Lacs) As at 31st As at 31st PARTICULARS March, 2014 March, 2013

NOTE - 12 : NON CURRENT INVESTMENTS TRADE INVESTMENTS In Equity Shares - Unquoted, fully paid up Kerala Solvent Extract Ltd., (500 shares of Rs.10 each) 0.05 0.05 Sterling Spinners Ltd., (1000 shares of Rs.10 each) 0.25 0.25 Annai Power Pvt. Ltd., (10400 shares of Rs.100 each) 10.40 10.40

Total A 10.70 10.70 OTHERS (QUOTED) Indian Overseas Bank (480 shares of Rs.10 each) 0.05 0.05 Reliance Equity Advantage Fund (535000 units of Rs.10 each) 53.50 53.50

Total B 53.55 53.55

Total A+B 64.25 64.25 Aggregate amount of Quoted investments Cost 53.55 53.55 Market Value 53.74 53.81 Aggregate amount of Unquoted investments 10.70 10.70

NOTE - 13 : LONG TERM LOANS AND ADVANCES (Unsecured and considered good) Capital Advances 156.12 23.79 Security Deposits 138.52 130.76 Loans and Advances to Related Parties -- 1.24 Other Deposits / Advances 17.20 36.57

311.84 192.36

NOTE - 14 : OTHER NON CURRENT ASSETS Deferred Trade Receivables 0.21 0.21 Others 13.36 15.08

13.57 15.29

NOTE - 15 : INVENTORIES Raw Materials 5,627.69 6,145.03 Finished Goods & Stock in Process 376.99 463.50 Stores and Spares 196.43 177.39 Packing Materials 92.20 83.79 6,293.31 6,869.71

rd 44 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

(Rs. in Lacs)

As at 31st As at 31st PARTICULARS March, 2014 March, 2013

NOTE - 16 : TRADE RECEIVABLES (Unsecured and considered good) Over Six Months 200.32 39.48 Others 2,823.59 1,797.62

3,023.91 1,837.10

(Dues from companies/firms in which directors are interested as directors / members / partners is Nil (PY Nil)

NOTE - 17 : CASH AND CASH EQUIVALENTS Cash and Cash Equivalents : Cash on Hand 20.78 29.52 Bank Balances : Balances with Bank in current account 282.59 342.66 Sub Total 303.37 372.18 Other Bank Balances : Fixed Deposit with Banks 170.26 82.83

473.63 455.01

NOTE - 18 : SHORT TERM LOANS AND ADVANCES (Unsecured and considered good) Loans and Advances to Related Parties 4.69 -- Loans and Advances to Employees 31.06 16.12 Advances Recoverable in cash or kind or for value to be received 136.31 247.94 Advance Income Tax (Net of provisions CY Rs. 304.50 lacs PY Rs. 363.63 lacs) 59.71 22.73

231.77 286.79

NOTE - 19 : OTHER CURRENT ASSETS (Unsecured and considered good) Income Receivable 56.84 35.25 Others 0.27 --

57.11 35.25

rd 45 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014 (Rs. in Lacs) PARTICULARS 2013-2014 2012-2013

NOTE - 20 : REVENUE FROM OPERATIONS A. Sale of products Manufactured Products Wheat & Wheat Products 32,801.03 26,467.92 Minerals and Others 3,283.62 2,828.42 36,084.65 29,296.34 Less : Excise duty - - 36,084.65 29,296.34 Traded Goods Minerals 1,756.65 3,085.52 B.OTHER OPERATING INCOME Grinding Charges 39.00 62.97 Conversion Charges 3,083.13 2,746.85 Sale of scrap 353.23 520.29 Warehousing Charges 160.88 152.70 Weighbridge Income 44.40 42.36 Power Income 588.92 732.01 Lorry Income 218.99 224.84

42,329.85 36,863.88

NOTE - 21 : OTHER INCOME Interest Income 14.08 22.95 Dividend Income 1.52 0.45 Net Gain / (Loss) on Sale of Assets 1.69 - Rent Receipts 119.42 138.15 Others 0.46 1.47

137.17 163.02

NOTE - 22 : COST OF MATERIALS CONSUMED Wheat 27,476.78 22,260.82 Minerals & Others 1,924.72 2,069.36

29,401.50 24,330.18

NOTE - 23 : PURCHASES OF STOCK IN TRADE Wheat 1,606.48 2,557.90 Minerals & Others 1.03 115.25

1,607.51 2,673.15

rd 46 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

(Rs. in Lacs)

PARTICULARS 2013-2014 2012-2013

NOTE - 24 : CHANGES IN INVENTORIES OF FINISHED GOOD, STOCK IN PROCESS AND STOCK IN TRADE

Finished Goods / Stock in Trade (at close) Wheat Products 275.12 360.22 Minerals & Others 101.87 103.28

Total A (at close) 376.99 463.50

Finished Goods / Stock in Trade (at commencement) Wheat Products 360.22 168.26 Minerals & Others 103.28 13.65

Total B (at commencement) 463.50 181.91

(Increase)/decrease A -B 86.51 (281.59)

NOTE - 25 : EMPLOYEES BENEFITS EXPENSE Salaries 532.77 444.60 Wages 396.73 387.22 Bonus & Exgratia 91.40 77.50 Gratuity 21.75 19.29 House Rent Allowance 154.68 130.30 Staff Training Fees 18.59 37.00 Contribution to Provident Fund & Other Funds 148.08 136.56 Leave Salary 16.24 9.80 Staff Welfare Expense 101.20 85.51 Conveyance Allowance 101.47 59.15 Special Allowance 79.15 47.55 Entertainment Allowance 15.91 9.90 Washing Allowance 15.94 9.92 Directors Salary 147.39 104.00

1,841.30 1,558.30

NOTE - 26 : FINANCE COSTS Interest Expense - Banks 1,959.94 893.53 Interest Expense - Others 314.43 640.81 2,274.37 1534.34

rd 47 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

(Rs. in Lacs)

PARTICULARS 2013-2014 2012-2013

NOTE - 27 : OTHER EXPENSES MANUFACTURING EXPENSES Production Expenses 566.35 459.81 Power and Fuel 1,378.81 1,363.43 Repairs to Machinery 364.37 475.85 Laboratory Expenses 18.61 19.01

Total A 2,328.14 2,318.10

ESTABLISHMENT EXPENSES Annual Maintenance Charges 80.52 73.62 Bank Charges and Commission 130.03 84.91 Repairs to Building 63.23 66.09 Printing & Stationery 21.76 16.05 Subscription 10.55 5.33 Telephone 30.27 23.84 Professional Charges 43.12 27.84 Audit Fees 2.50 2.50 Directors Sitting Fees 0.90 0.90 Security Charges 70.51 78.34 Legal Expenses 4.56 5.15 Donations 20.11 18.28 Travelling & Vehicle Maintenance 487.64 435.25 Insurance 54.41 43.24 Rates, Licence and Taxes 35.23 39.20 Pooja Expenses 4.58 5.30 Postage 4.56 3.68 Computer Maintenance 5.14 4.56 Rent & Electricity 64.16 68.95 Windmill Expenses 18.16 18.66 Others 9.12 10.51 Total B 1,161.06 1,032.20

SELLING & DISTRIBUTION EXPENSES Advertisement 56.44 118.42 Brokerage and Commission 22.36 19.43 Discount & Claims and Settlement 68.81 36.04 Sales Promotion 344.16 270.81 Freight and Handling 262.77 221.98 Total C 754.54 666.68 Grand Total A+B+C 4,243.74 4,016.98

rd 48 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

(Rs. in Lacs)

PARTICULARS 2013-2014 2012-2013

NOTE - 28 : VALUE OF IMPORTED AND INDIGENOUS MATERIALS CONSUMED

Raw Materials Imported -- 380.64 Indigenous 29,401.51 23,949.54 Stores and Spares Imported 38.32 12.03 Indigenous 326.05 463.82

NOTE - 29 : CIF VALUE OF IMPORTS

Raw Materials -- 441.30 Components and Spares 36.67 8.05 Capital Goods 576.23 1,256.31

NOTE - 30 : EXPENDITURE IN FOREIGN CURRENCY -- --

NOTE - 31 : EARNINGS IN FOREIGN EXCHANGE Green Energy Credit (carbon credit) -- 5.30

NOTE - 32 : REMUNERATION TO AUDITORS As Auditors 2.00 2.00 Taxation matters 0.50 0.50

NOTE - 33 : TAXES ON INCOME

Current tax : Current Tax is determined in accordance with the Income Tax Act, 1961.

Deferred tax : Deferred Tax is calculated at the rates and laws that have been enacted or substantively enacted as of the Balance Sheet date and is recognised on timing difference that originate in one period and are of capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence are recognised and carried forward only to the extent that they can be realised.

rd 49 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

NOTE - 34 : RELATED PARTY DISCLOSURES: a) Names of the related parties and nature of Relationship (i) Associate Companies M/s. Naga Marine Industries Limited M/s. M.M. Detergents Company Private Limited M/s. Annai Power Private Limited ii) Firm M/s. Rohini Enterprises iii)Key Managerial Personnel Sri. K.S. Kamalakannan Smt. Mageswarikannan Sri. Sounderkannan b) The above information regarding related parties have been determined to the extent such parties have been identified on the basis of information available with the company. Transactions with related parties. (Rs. in lacs) Associate Key Mgmt Particulars Companies Firm Personnel Total ------Sales 458.72 ------458.72 1,503.15 ------1,503.15 Purchases 884.79 ------884.79 ------Wind Power Charges 13.70 13.70 22.13 ------22.13 --- Processing Income / Charges 9.61 6.31 15.92 15.43 0.64 --- 16.07 --- Rental Income --- 3.00 3.00 0.57 ------0.57 Maintenance Expenses 13.75 ------13.75 ------Remuneration ------147.39 147.39 ------104.00 104.00 Rent Paid 7.00 --- 22.09 29.09 8.50 --- 21.30 29.80 Interest Paid ------145.13 145.13 ------144.57 144.57 Unsecured Loans 21.16 --- 1,287.50 1,308.66 96.57 --- 1,209.41 1,305.98 Debtors & other receivables 4.69 ------4.69 37.75 1.24 --- 38.99 Creditors & other payables 856.01 --- 27.39 883.40 43.65 ------43.65

Note : Figures in italics represent previous year’s amounts

rd 50 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014 (Rs. in Lacs)

PARTICULARS 2013-2014 2012-2013

NOTE - 35 : EARNING PER SHARE: i) Net Profit after tax as per statement of Profit and Loss (Rs in lacs) 1,013.17 1,403.81 ii) Weighted Average number of Equity Shares outstanding 1,42,48,000 1,42,48,000 iii) Basic & Diluted Earning Per Share (in Rs.) 7.11 9.85 iv) Face Value Per Share (in Rs.) 10.00 10.00

NOTE - 36 : CONTINGENT LIABILITIES AND COMMITMENTS I) Contingent Liabilities a) Guarantees to banks Bank Guarantee Limit 1,500.00 1,000.00 Bank Guarantee Utilised 74.09 888.75

b) Corporate Guarantees i) Furnished to M/s.M.M.Detergents Company Pvt. Ltd., for purchase of one no. of Excavator and one Breaker 52.60 52.60 ii) Commitments Estimated amount of contract remaining to the executed on Capital Account (net of advances) and not provided for -- -- iii) Disputed demands of Service Tax outstanding 304.00 352.59 iv) Disputed demands of Customs Duty outstanding -- 12.26 v) Disputed demands of Sales Tax 39.60 39.60

The Company has been legally advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision has been made.

NOTE - 37 : SEGMENT REPORTING:

The Business segment has been identified on the basis of products of the Company and accordingly the operating segments of the Company are foods, Windmill and Minerals & Detergents. Segments have been identified and reported taking into consideration nature of products and services, the different risks and returns and the internal business reporting systems. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company with following additional policies for segment reporting.

rd 51 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

Notes on Financial Statements for the year ended 31st March, 2014

(Rs. in Lacs) Minerals Foods Windmill Particulars & Total Division Detergents Division Segment Sales & Operational Income 35,071.66 6,786.46 608.90 42,467.02 29,710.62 6,583.45 732.83 37,026.90 Segment Result before Interest and Taxes 1,931.82 1,467.32 242.90 3,642.04 1,700.12 1,215.72 435.94 3,351.78 Less : Interest Expense 1,562.74 641.73 69.90 2,274.37 790.31 616.35 127.68 1,534.34 Profit before Tax 369.08 825.59 173.00 1,367.67 909.81 599.37 308.26 1,817.44 304.50 Current Tax - - - 363.63 - - - 50.00 Deferred Tax 50.00 1,013.17 Profit after Tax - - - 1,403.81 99.36 Less : Proposed Dividend and Dividend Tax - - - 100.02 Retained Profit - - - 913.81 1,303.79 Segment Capital Employed 2061.21 3,421.30 703.01 6,185.52 Segment Assets-Segment Liabilities 3,578.98 1,255.15 437.57 5,271.70

Note : Figures in Italics represent previous year’s amounts

NOTE - 38 : PREVIOUS YEAR FIGURES

Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.

As per our report of even date For and on behalf of the Board For D Sampathkumar & Co., Chartered Accountants (Firm Registration No : 003556S)

M.K. Ravindran K.S.Kamalakannan Mageswari Kannan V. Marikannan Partner Chairman & Managing Joint Managing Company Secretary M.No: 020887 Director Director

Place : Chennai Date : May 12, 2014

rd 52 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2014

(Rs. in Lacs) Particulars 2013 - 2014 2012 - 2013

(A) CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT / (LOSS) BEFORE EXTRAORDINARY ITEMS 1,367.67 1,817.44 Adjustment for : Depreciation and amortisation of expenses 1,644.42 1,378.10 Interest Income (14.08) (22.95) Dividend Income (1.52) (0.45) Interest Expenses 2,274.37 1,534.34 Surplus on sale of assets (1.69) -- 3,901.50 2,889.04 OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 5,269.17 4,706.48 Adjustment for : Income Tax (341.48) (285.20) Trade and other receivables (1,116.61) 149.49 Inventories 576.40 (4,490.02) Trade payables and other payables 883.35 (1,551.58) 1.60 (6,177.31)

Net Cash from Operating Activities 5,270.77 (1,470.83) (B) CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (2,453.62) (4,981.11) Changes in Non-Current Assets (124.30) -- Long Term Investments -- (12.50) Proceeds from Sale/Deletion of Fixed Assets 4.19 -- (2,573.73) (4,993.61) Net Cash flow from Investing activities 2,697.04 (6,464.44) (C) CASH FLOW FROM FINANCING ACTIVITIES Interest Income 14.08 22.95 Dividend Income 1.52 0.45 Interest Expenses (2,274.37) (1,534.34) Proceeds / Repayment of Borrowings (320.29) 8374.08 Dividend Paid (including dividend distribution tax) (99.36) (100.02) Net cash from Financing Activities (2,678.42) 6,763.12 (D) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 18.62 298.68 Cash and Cash equivalents at the beginning of the period 455.01 156.33 Cash and Cash equivalents at the end of the period 473.63 455.01 18.62 298.68

As per our report of even date For and on behalf of the Board For D Sampathkumar & Co., Chartered Accountants (Firm Registration No : 003556S)

M.K. Ravindran K.S.Kamalakannan Mageswari Kannan V. Marikannan Partner Chairman & Managing Joint Managing Company Secretary M.No: 020887 Director Director Place : Chennai Date : May 12, 2014

rd 53 23 ANNUAL REPORT 2013-2014 NAGA LIMITED FORM NO. MGT 11 PROXY FORM (Pursuant to section 105 (6)of the Companies Act, 2013 and Rule 19(3) of the Companies (Management and Administration) Rules, 2014.) NAGA LIMITED (CIN L24246TN1991PLC020409) Registered Office : No.1, Anna Pillai Street, Chennai - 600 001. E-mail : [email protected], Website : www.nagamills.com Phone : 044-25363535, Fax : 0451-2410122

Name of member(s) : Registered address : E Mail Id : Folio No. / DPID - Client ID :

I/We, being the member(s) of ______shares of the above named Company, hereby appoint :

1) Name______E Mail : ______Address : ______Signature ______Or failing him / her

2) Name______E Mail : ______Address : ______Signature ______as my / our proxy to attend and vote (on a poll) for me / us and on my / our behalf at the 23rd Annual General Meeting of the Company, to be held on Friday, 1st August, 2014 at 12.15 p.m. at Presidency Club, No.51, Ethiraj Salai, Egmore, Chennai-600 008 and at any adjournment thereof in respect of such resolutions, in the manner as indicated below : * Optional Resolution Description Type of No. Resolution For Against Ordinary Business

1. Adoption of audited financial statements and Reports of the Board Ordinary of Directors and Auditors for the financial period ended on 31st March 2014. 2. To declare a dividend on the equity shares of the Company Ordinary 3. To appoint a director in place of Sri. Sounder Kannan, who retires Ordinary by rotation and being eligible offers himself for re-appointment. 4. To appoint M/s. D. Sampathkumar & Co., Chartered Accountants Ordinary as Statutory auditors of the Company and fix their remuneration. Special Business 5. Re-appointment of Sri.K.S.Kamalakannan, Chairman & Managing Special Director of the Company. 6. Re-appointment of Smt. Mageswari Kannan, Joint Managing Director Special of the Company. 7. Re-appointment of Sri.Sounder Kannan, Whole-Time Director of Special the Company.

8. Approval for increasing borrowing power of the Board of Special Directors under Section 180(1)(c) of the Companies Act, 2013.

rd 54 23 ANNUAL REPORT 2013-2014 NAGA LIMITED

* Optional Resolution Description Type of No. Resolution For Against 9. Ratification of remuneration payable to Mr.D.Vijay Anand, Vice- Special President of Foods Division. 10. Ratification of remuneration payable to Smt. Monna Kannan, CEO Special of the Retail Division. 11. Ratification of remuneration payable to Ms.M.Jayalalitha, CEO of Special the Detergents Division.

12. Ratification of remuneration payable to Sri. M. Sukumar, Commercial Special Manager of the Minerals Division.

13. Ratification of remuneration payable to Smt. Lakshmi Vijay Anand, Special CEO of the Foods Division. 14. Re-appointment of Sri. S. Ramesh, as an Independent Director for Special a term of second consecutive five years. 15. Re-appointment of Sri. L.A. Irudayaraj, as an Independent Director Special for a term of second consecutive five years. 16. Approval for creation of Charges on the Assets of the Company Special under section 180(1)(a) of the Companies Act, 2013.

Affix Signed this ...... day of ...... 2014 revenue stamp not less than Signature of Shareholder : ...... Signature of Proxy holder(s) : ...... Rs. 0.15 NOTE: 1. This form of proxy, in order to be effective, should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours before the commencement of the Meeting; 2. For the Resolutions, Explanatory Statement and Notes, please refer to the Notice of the 23rd AGM; *3. It is optional to put a 'tick”' in the appropriate column against the Resolution indicated in the Box, if you leave the 'For' or 'Against' column blank against any or all Resolutions, your Proxy will be entitled to vote in the manner as he / she think appropriate; 4. Please complete all details including details of member(s) in above box before submission;

______Attendance Slip NAGA LIMITED (CIN L24246TN1991PLC020409) Registered Office : No.1, Anna Pillai Street, Chennai - 600 001. E-mail : [email protected], Website : www.nagamills.com Phone : 044-25363535, Fax : 0451-2410122 23rd Annual General Meeting - August 01, 2014 Registered Folio No. / DP ID No. / Client ID No.

Number of Shares held

I certify that I am a member / proxy for the members of the Company. I hereby record my presence at the 23rd Annual General Meeting of the Company at the Presidency Club, No.51, Ethiraj Salai, Egmore, Chennai - 600 008 on Friday the 1st August, 2014, at 12.15 P.M.

...... Name ofthe Member / Proxy Signature of the Members / Proxy (in BLOCK letters) Note : Please fill up this attendance slip and hand it over at the entrance of the meeting hall, members are requested to bring their copies of the Annual Report to the AGM.

rd 55 23 ANNUAL REPORT 2013-2014