Power to Be a Winner

POWER TO BE A WINNER

Regd. Office: 1008, DLF Tower-A, Jasola District Centre, New Delhi 110 025 Ph.:+91 11 49494949 Fax: +91 11 49494950 Designed & Printed at Thomson Press Website: www.cosmofilms.com Designed & Printed at Thomson Press ANNUAL REPORT 2009-10 COSMO FILMS LIMITED

Mission

• Cosmo will seek global market leadership.

• Development & growth in Oriented and Vision Thermal Films.

To become the most preferred brand for • We will continue to create a winning culture, packaging and laminating solutions globally. operating in the highest standards of ethics and values.

• We will strive for excellence in customer service, quality and R&D.

1 CUSTOMER ORIENTATION We always remember that Customers have choices, and we will do whatever it takes to develop long term relations with them. Our customers always come first, and we strive to exceed their expectations from the point of quality and service.

PEOPLE Our people are our most important asset. We treat all equally and with respect.

INNOVATION We encourage innovation in every facet of our business activity and are not afraid of taking manageable risks. We take pride in developing cost effective innovative packaging and laminating solutions for our customers.

FAIR BUSINESS PRACTICES We act fairly and ethically with all the stakeholders. We promote transparency, and adhere to best corporate governance practices.

2 COSMO FILMS LIMITED

CONTENTS

Corporate Information 4 Directors’ profile 6 Management Team 7 Five year trends 9 Achievements in 2009-10 13 Directors’ Report 14 Management Discussion & Analysis 17 Corporate Governance Report 18 Corporate Social Responsibility 31 STANDALONE FINANCIAL STATEMENTS -Auditors’ Report 32 -Balance Sheet 36 -Profit & Loss Account 37 -Cash Flow Statement 38 -Schedules to Accounts 39 -Notes on Accounts 48 -Balance Sheet Abstract and Company’s General Business Profile 58 Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiaries 59 Financial Information of Subsidiaries 60 CONSOLIDATED FINANCIAL STATEMENTS -Auditors’ Report 61 -Consolidated Balance Sheet 62 -Consolidated Profit & Loss Account 63 -Consolidated Cash Flow Statement 64 -Schedules to Consolidated Accounts 65 -Notes on Consolidated Accounts 73

3 REGISTERED OFFICE: Panchmahals 1008, DLF Tower-A, Jasola District Centre, Plot No. 359-B, Baska Village, Taluka : Halol New Delhi 110 025 Distt: Panchmahals, Gujarat Tel: +91 11 49494949, Tel: + 91 2676 247216 Fax: +91 11 49494950 Email: [email protected] Email: [email protected] Website: www.cosmofilms.com Kerkrade, Netherlands Mercuriusstraat 9 PLANTS: 6468 ES Kerkrade The Netherlands Aurangabad Tel: 31 45 535 7676 Fax: 31 45 535 7878 Plant I Email: [email protected] J-4, MIDC Industrial Area, Chikalthana, Aurangabad 431 210 Tel: +91 240 2485894 Hagerstown, USA 560, Maryland, Parkway, Hagerstown, Maryland, USA 21740 Plant II Tel: +302-328-7780 B-14/8-9, MIDC Industrial Area, Waluj, Fax: +302-295-9945 Aurangabad 431 136 Email: [email protected] Tel: +91 240 2554611/12/13/14 Fax: +91 240 2554416 Email: [email protected] Asan, Korea 98-18, Shin Hang Ri Doon Po Myun, Asan City, Choong Nam 336-873 Plant III (EOU) Republic of Korea, B-21, MIDC Industrial Area, Aurangabad 431 136 Tel: 82-41-531-1830, Tel: +91 240 2551888, 2553353/54 Fax: 82-41-531-1831 Email: [email protected] Email: [email protected]

Vadodara STATE OFFICES: Vermardi Road, Village Navi Jithardi, Near Inox, Off: N H Road, Taluka, Karjan Distt: Vadodara 391 240 Delhi: Tel: +91 2666 232960, 320707 1008, DLF Tower-A, Jasola District Centre, Fax: + 91 2666 232961 New Delhi 110 025 Email: [email protected] Tel: +91 11 49494949, Fax: +91 11 49494950 Email: [email protected]

4 COSMO FILMS LIMITED

Mumbai: Mauritius: 303, 3rd Floor, Gokul Arcade, A Wing, CF Global Holdings Ltd. rd Opp. Hong Kong Bank, Subhash Road, Regd. Office : 3 floor, DHL Building, Sir Virgil Naz Street, Port Louis, Mauritius Vile Parle (E), Mumbai 400 057 Tel: +91 22 28261195, 28261197, 28266395 CF (Mauritius) Holdings Ltd. Fax: + 91 22 28261201 Regd. Office : 3rd floor, DHL Building, E-mail: [email protected] Sir Virgil Naz Street, Port Louis, Mauritius

Hyderabad: EUROPE 1405/B, 14th Floor, Babu Khan Estate, Netherlands: Basheerbagh, Hyderabad 500 001 Cosmo Films (Netherlands) Cooperatief U.A. Tel: +91 40 23297620, 23297622 Regd. Office: Kabelweg 37,1014BA, Fax: +91 40 23297622 Amsterdam, Netherlands E-mail: [email protected] Email: [email protected]

SUBSIDIARIES: CF (Netherlands) Holdings Limited B.V. Regd. Office: Kabelweg 37,1014BA, ASIA PACIFIC Amsterdam, Netherlands Singapore: Email: [email protected] Cosmo Films (Singapore) Pte. Ltd. 10 Jalan Besar, # 10-12, Sim Lim Tower, USA Singapore 208787 Cosmo Films, Inc. Tel: 65-6511-2922, 65-6511-2923 1400, Johnson Way, Suite D, Fax: 65-6511-2968 New Castle, Delaware 19720 USA Email: [email protected] Tel: +302-328-7780 Fax: +302-295-9945 Email: [email protected] Korea: Cosmo Films Hwa Seung Co. Ltd. BRANCH: 98-18, Shin Hang Ri Doon Po Myun, Asan City, Choong Nam 336-873 UAE: Republic of Korea, Cosmo Films Ltd. Tel: 82-41-531-1830, Executive Suite 62, Postbox 121285 Fax: 82-41-531-1831 Sharjah Airport International Free Zone Email: [email protected] Sharjah UAE Tel: +971 65574023 Japan: Fax: +971 65574024 CF Global Holdings GK Email: [email protected] Yamatane –Nai, Tokyo-Danashsoko, 6-2-11 , Iriya, Adachi, Ku, Tokyo, 121-0836, Japan Tel: 81-3-5837-1805 Fax: 81-3-5837-1807 Email: [email protected]

5 DIRECTOR IN EXECUTIVE CAPACITY

Ashok Jaipuria Chairman & Managing Director

DIRECTORS IN NON-EXECUTIVE CAPACITY

H K Agrawal, (Independent) B.E. & MBA (IIM), Management Consultant

Dr. Surinder Kapur (Independent) Ph.D. in Mechanical Engineering, Chairman, Sona Koyo Steering Systems Ltd.

Rajeev Gupta (Independent) B.E. & MBA, Managing Director, Carlyle India Advisors Pvt. Ltd.

Badri Agarwal, Chartered Accountant

R Vasudevan (Independent) B.A. (Hons) Economics, M.A. (Economics & Statistics) MPA (Development Economics) Harvard University, USA

Suresh Mathur (Independent) Chartered Accountant

Suresh Rajpal (Independent) BE (Electrical), MBA, Chairman, Visnova Solutions Pvt. Ltd.

6 COSMO FILMS LIMITED

MANAGEMENT TEAM

Ashok Jaipuria Chairman & Managing Director S Sundarram President A K Jain Chief Financial Officer Sanjay Govil Chief Information Officer A G Deshpande Vice President – Business Development Janardan Gupta Vice President – Global Logistics Tanuj Agarwal Vice President – Corporate Planning S C Maity General Manager – Manufacturing A K Pathak General Manager – Manufacturing R T Mahajan General Manager – Manufacturing Dr. Asim Khamrai General Manager – R&D N R More General Manager – Maintenance R K Gupta General Manager – Finance & Accounts Dr. S Mishra General Manager – Marketing (Exports) Sanjay Chincholikar General Manager – Marketing (Domestic) S K Dutta General Manager – Marketing Services S Anand Head-HR Ankush Kaura Head-Information Technology Shailesh Verma Head-International Market Development Parvinder S Arora Company Secretary

A U D I T O R S M/s B.K. Shroff & Co.

B A N K E R S & F I N A N C I A L I N S T I T U T I O N S

Landes Bank Baden-Wurttemberg IDBI Bank Limited ICICI Bank Limited HSBC Bank Plc. Export Import Bank of India Union Bank of India State Bank of India ING Vysya Bank Limited HDFC Bank Limited Kotak Mahindra Bank Limited Yes Bank Limited

7 Inside our factory

PVDC Plant

WINDER

SLITTER

8 COSMO FILMS LIMITED

Five year trends

Net sales* 753.26 EBIDTA* 106.24 753.26 106.24 104.27 654.81 93.81 585.16 535.61 71.55 424.11 58.55 EBIDTA Net sales

Export sales* 334.69 Market capitalisation* 231.63 231.63 334.69 332.66 286.21 277.43 166.21 143.27 134.72 120.82 170.63 Export sales Market capitalisation

*Amount in Rs. crores Graphs not to scale

9 Financial performance ratios

EBIDTA / Net Sales 14.1% EBIT / Net Sales 10.3% 12.7% 16.0% 15.9% 11.7% 14.1% 13.8% 10.3% 13.4% 8.5% 6.6% EBIT / Net Sales EBIDTA / Net Sales EBIDTA

PAT / Net Sales 6.1% 7.6% 6.5% 6.1% 4.6% 3.0% PAT / Net Sales PAT

Graphs not to scale

10 COSMO FILMS LIMITED

Per share ratios

Earning per share 23.57 Dividend rate 50% 50% 50% 50% 23.57 22.89 21.98 40% 40% 12.77 Dividend rate (%) 6.62 Earning (Rs.) per share

Book value per share 150.05 PE ratio = MP / EPS 5.06 10.12 150.05 132.34 5.77 93.19 5.06 76.25 67.99 3.74 PE ratio = MP / EPS 2.83 Book value per share (Rs.) Book value per share

Graphs not to scale

11 Balance sheet ratios

Return on net worth (RONW)* 17% Return on capital employed (ROCE)* 11% 27% 17% 13% 19% 12% 18% 17% 11% 8% 10% Return on net worth (RONW)* % Return on capital employed (ROCE)

Current ratio 1.44 Asset coverage ratio 2.67 2.93 2.67 1.59 2.37 1.56 1.54 1.44 1.37 1.87 1.75 Current ratio Current Asset coverage ratio

Graphs not to scale *Net worth excludes deferred tax liabilities

12 COSMO FILMS LIMITED

Balance sheet ratios

Interest coverage ratio 5.15 Total Debt / Equity ratio 0.83 1.32 6.05 1.06 5.34 5.15 0.90 0.83 0.79 3.01 2.46 Interest coverage ratio Interest Total Debt / Equity ratio Total

Graphs not to scale

What we achieved in 2009-10

Acquisition of GBC’s Commercial Print Finishing Business from ACCO Brands Corporation, USA.

Highest ever net sales of Rs. 963.13 Crores on consolidated basis.

13 Directors’ report

Your directors present the 33rd Annual Report and the audited accounts for the year ended 31st March, 2010 (F.Y. 2010). (Rs. crores) FINANCIAL RESULTS Standalone Consolidated 2009-10 2008-09 2009-10 2008-09 Net Sales 753.26 654.81 963.13 632.69 Profit before interest, depreciation and tax 106.24 104.27 105.83 89.39 Interest 15.02 13.79 18.28 14.00 Depreciation 28.92 20.80 33.86 21.00 Exceptional Item - (5.06) - (5.06) Profit before Tax 62.30 64.62 53.69 49.33 Provision for - Current Tax 14.66 11.92 19.17 11.92 - Deferred tax 1.82 9.96 (3.89) 8.03 Profit after Tax 45.82 42.74 38.41 29.38 Extraordinary Item (1.22) 44.72 29.28 44.72 Profit after tax including extraordinary item 44.60 87.46 67.69 74.10 Minority Interest - - 4.21 - APPROPRIATIONS Less : Dividend-Equity shares 9.72 9.72 9.72 9.72 Dividend Tax 1.61 1.65 1.61 1.65 General Reserve 33.27 76.09 52.15 62.73

DIVIDEND of Euro vis a vis USD & INR continues unabated and margins are likely to remain under pressure. Equity dividend of Rs 5/- per share (Previous Year Rs. 5/- per share) has been recommended by the Board of Directors for the EXPORTS year ended 31st March, 2010 amounting to Rs 9.72 crores (Previous Year Rs. 9.72 Crores) on the equity share capital. Cosmo continues to maintain its position of the largest BOPP film exporter from India. Exports grew from Rs. 286.21 crores in ACQUISITION OF GBC'S PRINT FINISHING BUSINESS 2008-09 to Rs. 334.69 crores in 2009-10. On 11th June 2009, your company completed the acquisition of R & D GBC’s Commercial Print Finishing Business, from ACCO Brands Continuous efforts on R & D and Application Development Corporation of USA, for a purchase consideration of USD 17.1 activities are being made to expand the domestic and export million. This business, with global sales revenue of approx USD markets. 100 million in 2008, has manufacturing facilities in US, Netherlands and South Korea. The purchase consideration was funded by DIRECTORS combination of internal accruals, debt and seller deferred payment Mr. Hasmukh Shah and Mr. H L Paranjpe ceased to be Directors note of USD 4 million. of the Company w.e.f. 12th April, 2010 and 25th June, 2009 This acquisition will help your company to further strengthen its respectively. The Directors place on record their appreciation for presence in the global market including key markets of Europe the help, guidance and contribution made by Mr. Shah and and United States. Mr. Paranjpe during their tenure as Director. OPERATIONS Mr. Suresh Rajpal has been appointed as a Director in the casual vacancy caused by resignation of Mr. H L Paranjpe w.e.f. Net Sales grew 15% year on year (standalone) in Financial Year 28th May, 2010. 2009-10, but EBIDTA remained flat primarily due to difficult market conditions in India, sluggishness in European markets and stiff Mr. R Vasudevan, Director, retires by rotation and being eligible depreciation of Euro against USD/INR. The acquisition of GBC offers himself for re-appointment at the ensuing Annual General helped to partly offset the adverse impact of aforementioned Meeting. factors. With the commissioning of new BOPP capacities in India, Mr. Suresh Mathur, who was appointed as Director on 22nd April, competition in domestic markets may further intensify. The decline 2009, in the casual vacancy caused by the resignation of

Cosmo 14-35.p65 14 8/3/2010, 12:27 PM Mr. Vimal Bhandari, holds office upto the date of ensuing Annual b) Particulars of employees pursuant to section 217(2A) of the General Meeting. Companies Act, 1956. The Company has received a notice from a member, as required DIRECTORS' RESPONSIBILITY STATEMENT under section 257 of the Companies Act, 1956, along with the requisite deposit in respect of Mr. Suresh Mathur, proposing his In accordance with the provisions of section 217(2AA) of the appointment as Director of the Company. Companies Act, 1956, your directors state that: There are no inter-se relationships of any of the directors in terms (i) In the preparation of the annual accounts, applicable of disclosure requirements of the Listing Agreement with the Stock accounting standards have been followed along with proper Exchanges. explanation relating to material departures. OUTSTANDING WARRANTS ISSUED ON PREFERENTIAL (ii) Accounting policies selected were applied consistently. BASIS Reasonable and prudent judgments and estimates are made 31,00,000 nos. of warrants entitling the holders to an equal number so as to give a true and fair view of the state of affairs of the st of shares issued on preferential basis lapsed on 3rd August, 2009 Company as of 31 March, 2010 and of the profits of the on account of non exercise of option by the holders. Accordingly, Company for the year ended on that date. the advance of Rs. 3.32 crores paid by the holders to the Company (iii) Proper and sufficient care has been taken for the maintenance was forfeited and added to reserves. of adequate accounting records in accordance with the FIXED DEPOSIT provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud th The Company has stopped accepting fixed deposits since 17 and other irregularities. October, 2002. However, deposits of Rs. 0.004 Crores remained unclaimed (Previous Year Rs. 0.008 Crores), as on 31st March, 2010. (iv) The annual accounts of the Company have been prepared on a going concern basis. AUDITORS' REMARKS CORPORATE GOVERNANCE The Auditors' remarks on the annual accounts are self explanatory and do not require further explanation. A Management Discussion and Analysis is annexed and forms SUBSIDIARIES part of this report. The Ministry of Corporate Affairs, Government of India has granted A separate report on Corporate Governance along with the approval that the requirement to attach the Balance Sheet & other Auditors’ certificate on compliance of conditions of Corporate documents in respect of subsidiary companies, as required under Governance as stipulated in clause 49 of the Listing Agreement section 212(1) of the Companies Act, 1956, shall not apply to the with the Stock Exchanges form part of this report. Company. Accordingly, these documents are not being attached AUDITORS with the Balance Sheet of the Company. Financial information, as required under the said approval, is disclosed elsewhere in the The Auditors M/s. B.K. Shroff and Co., Chartered Accountants, Annual Report. The Consolidated Accounts of the company duly hold office till the conclusion of ensuing Annual General Meeting audited by the Statutory Auditors forms part of the Annual Report. and are eligible for re-appointment. The requisite certificate under The Company will provide the annual accounts of the Subsidiary section 224(1B) of the Companies Act, 1956 has been received Companies and related detailed information to any member of from M/s. B.K. Shroff and Co., expressing their willingness to the company seeking such information at any point of time. The continue, if re-appointed. annual accounts of the subsidiary companies shall also be kept for inspection for any member at its head office and that of the APPRECIATION subsidiary companies. The annual accounts of the Subsidiary Your directors wish to place on record their appreciation of Companies concerned are also put up at the website of the continued support extended by the dealers, distributors, suppliers, Company i.e. www.cosmofilms.com. investors, bankers, financial institutions. Your directors also express The Statement as required under section 212 of the Companies their appreciation for the committed services by the employees of Act, 1956 in respect of the Company's Subsidiaries is enclosed. the Company. STATUTORY STATEMENTS As per the requirements of the Companies Act, 1956, the following information is given in separate statements annexed hereto, which On behalf of the Board forms part of this report: a) Energy conservation, technology absorption and foreign exchange inflow/outgo pursuant to section 217(1)(e) of the New Delhi Ashok Jaipuria th Companies Act, 1956. 5 July, 2010 Chairman

Cosmo 14-35.p65 15 8/5/2010, 12:10 PM INFORMATION AS PER SECTION 217(1)(e) READ WITH (d) Expenditure on R & D Rs. Crores COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND (a) Capital Nil FORMING PART OF THE DIRECTORS REPORT FOR THE (b) Recurring 4.23 YEAR ENDED 31ST MARCH, 2010. (c) Total 4.23 I. CONSERVATION OF ENERGY (d) Total R & D expenditure as 0.56% percentage of net sales (a) Energy conservation measures taken 2. Technology Absorption, adoption and innovation. Improvement in energy efficiency is a continuous process at Cosmo and conservation of energy is given a very (a) Efforts in brief, made towards technology high priority in all our plants and offices. absorption, adoption and innovation. The energy saving measures carried out by the company The Company's technology is developed in house, during the year are listed below: which has helped in improving efficiency and i) Replacing existing HPMV lighting with FTL fittings developing new products. to reduce power consumption. (b) Benefits derived as a result of the above efforts. ii) Installation of TDO waste heat recovery system in Growth in business. Waluj. (c) In case of imported technology (Imported during (b) Additional investments and proposals, if any, being the last 5 years reckoned from the beginning of implemented for reduction of consumption of energy; the financial year) following information may be Appointment of outside professional consulting firm for furnished. detailed study & providing guidance in the area of energy (a) Technology imported saving. (b) Year of import (c) Impact of the measures at (a) and (b) for reduction of (c) Has technology been fully absorbed energy consumption and consequent impact on the (d) If not fully absorbed, areas where this has not cost of production of goods; taken place, reason therefore and future plans The above measures have helped the Company to of actions: improve its energy management efficiently and N.A. (The Company has not imported any technology) consequently reduce cost. III. FOREIGN EXCHANGE EARNINGS AND OUTGO (d) Form A A. Activities relating to export initiatives taken to Not Applicable increase exports, development of new export markets II. TECHNOLOGY ABSORPTION for products and services and export plans. Efforts made in technology absorption as per Form-B of the Despite the Continuous tough market conditions, the Annexure in the Rules. Company increased its exports from 286.21 Crores in 2008-09 to 334.69 Crores in 2009-10. This was largely 1. Research and Development due to acquisition of GBC's Print Finish Business and (a) Specific areas in which R & D carried out by the Company's constant focus on new products and markets. Company: B. Total Foreign Exchange used and earned Development of new products and applications, alternate vendors for Raw Material and new The Company's foreign exchange earnings were Rs. additives. 334.69 Crores (Previous Year Rs. 286.21 Crores). The total Foreign Exchange utilized during the year amounted (b) Benefits derived as a result of above R & D: to Rs. 149.18 crores (Previous Year Rs. 221.23 Crores). Improvement in product quality and sales realisation Details of Foreign Exchange earned and utilized during through better product mix and upgradation of the year are given in Schedule 20. products as per customer needs. (c) Future Plan of Action On behalf of the Board The Company will continue its efforts towards the development of new products, new applications and New Delhi Ashok Jaipuria cost reduction measures. 5th July, 2010 Chairman

Cosmo 14-35.p65 16 8/3/2010, 12:28 PM Management discussion & analysis

The BOPP production registered an increase of 30% in INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY: 2009-10 over the previous year. The Company plans to increase production by 15% for the financial year 2010-11. The company has proper and adequate systems of internal The whole capacity of the Company (including of line 8 control in order to ensure that assets are safeguarded and commissioned in March, 2010) will be efficiently utilized. transactions are duly authorized, recorded and reported The Company is also planning a new BOPP line of correctly. With the Implementation of SAP system internal 35000 MT p.a., proposed to be commissioned in 2011-12. control will get further reinforced through system based checks and controls. With the acquisition of GBC’s Commercial Print Finishing business, the Company has become the largest producer Internal Audit function is being looked after by a professional of thermal films in the world. Presently, the Company has firm of Chartered Accountants, which conducts audit of all manufacturing facilities in India, Korea, Netherlands & USA. units/locations regularly. The statutory as well as Internal It also has sales and distribution set-ups across all the Auditors independently evaluate the adequacy of internal continents of the world. The capacity remained under utilized control system. Based on the audit observations & due to low demand in Europe & USA. suggestions, follow up & remedial measures are being taken on a regular basis. RISKS & CONCERNS: HUMAN RESOURCES/ INDUSTRIAL RELATIONS Key risks and concerns are: FRONT a) The capacity additions in the industry, which are far The company has well established Human Resources excess as compared to the increase in demand and Department equipped to meet the present and future growth the inability of the company to completely pass on the plans. There were 509 employees on the rolls of the unpredictable increase in raw materials costs due to company, as on 31st March, 2010. competitive pressure may affect the operating margins, adversely. Industrial relations were cordial throughout the year at all b) Exposure to foreign exchange risks due to import of locations. The unity of purpose to continuously strive for all raw materials, exports & foreign currency loans may round improvements in work practice & productivity is visible affect the EBIDTA, EBIT and PAT. among all the employees. Risk Mitigation CAUTIONARY STATEMENT Cosmo’s diversified product range & customers base (in Certain statements in the Management Discussion domestic as well as exports markets) and continuous Analysis describing the company’s views about the emphasis on cost reduction, product innovation etc. Industry’s expectations/predictions objectives etc. may be provides it an edge over our competitors to mitigate the forward looking within the applicable laws and regulations. above risks. Actual results may differ materially from those expressed in the statements. Company’s operations may be affected OPERATIONS & FINANCIAL PERFORMANCE with the demand and supply situations, input prices and The details of the financial performance are appearing their availability, changes in Government regulations, tax separately in the financial statements. For highlights, please laws and other factors such as industrial relations and refer to Directors’ Report & Key Ratios mentioned elsewhere economic developments etc. Investors should bear the in the Annual Report. above, in mind.

Cosmo 14-35.p65 17 8/3/2010, 12:28 PM Corporate governance report

For Cosmo, maintaining the highest standards of corporate professional body of Board of Directors, which comprise of governance is not a matter of mere form but also of an optimum combination of Executive and Non-Executive substance. It is an article of faith, a way of life, and an Independent Directors headed by the Chairman. The integral part of the Company's core values. Your company present strength of Board of Directors is eight (8), out of is committed for adopting best global practices of Corporate which six (6) are Non-Executive Independent Directors, Governance. The philosophy of Corporate Governance as constituting more than 50% of its total strength. The manifested in the Company's functioning is to achieve Company's Board consists of eminent persons with business excellence by enhancing long term shareholders considerable professional expertise and experience. The value and interest of its entire shareholders. Efficient independent directors do not have any pecuniary conduct of the business of the company through relationship or transactions with the company, promoters, commitment to transparency and business ethics in and management, which may affect independence or discharging its corporate responsibilities, are hallmarks of judgment of the directors in any manner. the best practices already followed by the Company. The composition of the Board of Directors of the Company The Company's compliance of Corporate Governance is in conformity with the provisions of clause 49 of the listing guidelines of the Listing Agreement is as follows: agreement with the Stock Exchanges. The structure of the Board and record of other Directorships, Committee A. COMPOSITION OF THE BOARD AND RECORD OF Memberships & Chairmanships and Shareholding in the OTHER DIRECTORSHIPS HELD Company as on 31st March, 2010 is as under: The Company is managed and controlled through a

Name of the Category Designation No. of other Total No. of Chairmanships / Shareholding Director Directorships Memberships of Board Level Committees (as on 31st Held March, 2010) Chairmanship Membership Total Mr. Ashok Jaipuria Promoter Director Chairman & 2 - - - 500161 Managing Director Mr. H. K. Agrawal Independent Non- Director - 2 - 2 1000 Executive Director Dr. Surinder Kapur Independent Non- Director 9 2 2 4 Nil Executive Director Mr. Rajeev Gupta Independent Non- Director - - 2 2 10100 Executive Director Mr. Hasmukh Shah^ Independent Non- Director 10 3 2 5 5000 Executive Director Mr. Badri Agarwal Non- Executive Director - - 1 1 Nil Director* Mr. R Vasudevan Independent Non- Director 3 1 5 6 Nil Executive Director Mr. Suresh Mathur Independent Non- Director 4 1 3 4 Nil Executive Director

* Mr. Badri Agarwal became a Non Executive Director on 9th June, 2009. Prior to this he was a Non Executive Independent Director. ^ Ceased to be a director w.e.f. 12th April, 2010.

Cosmo 14-35.p65 18 8/3/2010, 12:28 PM Notes: I. In addition to the above, Mr. Suresh Rajpal has been appointed as Director in casual vacancy (Independent) w.e.f. 28th May, 2010. II. The directorships held by directors as mentioned above, do not include alternate directorship, directorships of Foreign Companies, section 25 Companies and Private Limited Companies. III. In accordance with clause 49, Membership(s) / Chairmanship(s) of only the Audit Committee and Shareholder Investor Grievance Committee of all Public Limited Companies have been considered. IV. None of the Directors is a member of more than 10 Board-level committees of public Companies in which they are directors, nor is chairman of more than 5 such committees.

B. BOARD MEETINGS: 2. Number of Board Meetings 1. Scheduling and selection of agenda items for The Cosmo Films Board met five times on 22nd April, Board Meetings 2009, 5th June, 2009, 31st July 2009, 30th October, 2009 and 28th January, 2010 during the financial The months for holding the Board Meetings in the year ended 31st March, 2010. The maximum time ensuing year are usually decided in advance and gap between any two meetings was not more than most Board Meetings are held at the Company's four months. registered office in New Delhi. The agenda for each meeting, along with explanatory notes, is sent in 3. Record of the Directors' attendance at Board advance to the Directors. The Board meets at least Meetings and AGM once in a quarter to review the quarterly results and other items on the agenda.

Name of the Director Number of Board Meetings held during Attendance at last tenure of directors and attended by them AGM held on 25th August, 2009 Held Attended Mr. Ashok Jaipuria 5 5 Yes Mr. Badri Agarwal 5 4 No Mr. Hasmukh Shah 5 2 No Mr. H K Agrawal 5 4 Yes Mr. H L Paranjpe^ 2 2 No Mr. Rajeev Gupta 5 5 No Mr. R Vasudevan 5 5 No Dr. Surinder Kapur 5 1 No Mr. H N Sinor # 1 1 N.A. Mr. Suresh Mathur 4 3 Yes

^ Ceased to be a Director w.e.f. 25th June, 2009.

#Ceased to be a Director w.e.f. 23rd May, 2009. Mr. H K Agrawal, Independent Director and Chairman of the Audit Committee attended the Annual General Meeting on behalf of the Audit Committee.

Cosmo 14-35.p65 19 8/3/2010, 12:28 PM 4. Availability of information to the Board based on the exercise of judgement by the management, significant adjustments made in The Board has unfettered and complete access to any the financial statements arising out of Audit information within the Company and to any employee findings, qualifications in draft auditors' report, of the Company. Necessary information as mentioned related party transactions and the going in Annexure-1A of Clause 49 of the Listing Agreement concern assumption. has been regularly placed before the Board for its consideration. d) Compliance with the listing and other legal requirements concerning financial statements; C. BOARD LEVEL COMMITTEES e) Quarterly financial statements before In accordance with the Listing Agreement with the Stock submission to the Board for approval. Exchanges on Corporate Governance, the following committees were in operation: f) Reviewing with the management, performance of statutory auditors, internal auditors and 1. Audit Committee adequacy of internal control systems; 2. Share Transfer and Investor Grievance Committee. g) Reviewing the adequacy of internal control 1. AUDIT COMMITTEE system and internal audit function and reviewing the Company's financial and risk management Terms of reference policies As a measure of good Corporate Governance and h) Reviewing the findings of any internal to provide assistance to the Board of Directors in investigations made by the internal auditors into fulfilling the Board's oversight responsibilities, an matters where there is suspected fraud or Audit Committee has been constituted, headed irregularity or a failure of internal control by an independent director. All members are systems of a material nature and reporting the Non-Executive Directors and each member has rich matter to the Board. experience in financial sector. i) Reviewing reports furnished by the internal The role and terms of reference of the Audit auditors, discussion with the internal auditors Committee inter-alia includes the following: on any significant findings ensuring suitable i) Review of the following information: follow up there on. a) Overseeing the Company's financial reporting j) Discussion with the statutory auditors before process and disclosure of its financial the audit commences, about the nature and information to ensure that the financial scope of audit as well as post-audit discussion statements are correct, sufficient and credible. to ascertain any area of concern. b) Recommending, the appointment, re- k) To look into the reasons for substantial defaults appointment, replacement and removal of the in the payment to the depositor, debenture statutory auditor, audit fees payable and holders, shareholders (in case of payment of approving payment for any other services declared dividends) and creditors; payable to statutory auditors, to the Board. l) The functioning of Whistle Blowing mechanism; c) Reviewing, with the management, the annual m) Management discussion and analysis of financial statements before submission to the financial condition and results of operations; Board for approval, with primary focus on matters required to be included in the Directors n) Management letters / letters of internal control Responsibility Statement, changes if any in weaknesses issued by the statutory auditors. accounting policies and practices and reasons o) Approval of appointment of CFO (i.e. The thereof, compliance with accounting standards, Whole Time Finance Director, or any other major accounting entries involving estimates person heading the finance function or

Cosmo 14-35.p65 20 8/3/2010, 12:28 PM discharging that function) after assessing the 1. 22nd April, 2009 4. 30th October, 2009 qualifications, experience & background etc. th th of the candidate. 2. 5 June, 2009 5. 28 January, 2010 3. 31st July, 2009 p) Internal audit Reports pertaining to Internal Control weaknesses. The attendance record of the audit committee members is given in following table: q) The appointment, removal and terms of remuneration of the Chief Internal Auditor shall Names of the Audit Number of Audit Committee be subject to review by the Audit Committee. Committee members Meetings ii) Disclosure of the following information: Held during the Attended a) Related party transactions: tenure of Directors Mr. H K Agrawal 5 4 • Identification of related parties as per AS-18. Mr. Rajeev Gupta 5 5 • Statement in summary form of transactions with Mr. Badri Agarwal 5 4 related parties in the ordinary course of business. Mr. R Vasudevan 5 5 Mr. Suresh Mathur* 4 3 • Statement of material individual transaction with related parties which are not in the normal * Appointed as member of the Audit Committee w.e.f. 5th June, 2009. course of business. 2. SHARE TRANSFER AND INVESTOR GRIEVANCE • Material transactions with related parties or COMMITTEE (STIGC) others, which are not on arm's length basis. Terms of reference b) Compliance with Accounting Standards, and if in preparation of financial statements, a This Committee was constituted specifically to treatment different from that prescribed in an review compliance of rules and regulations, to Accounting Standard has been followed, redress shareholder's grievance and to provide management explanation for the same. suggestions. To expedite the process of share transfers, the Board has delegated the power of c) If money raised by way of issue (public issue, share transfer to M/s Alankit Assignments Limited rights issue, preferential issues, etc.) the uses viz. Registrar and Share Transfer Agents who attend / application of funds by major category (capital the share transfer formalities at least once in a exp, sales, working capital, etc.) fortnight. Composition and names of members Terms of reference of the Share Transfer and The Audit Committee, at present, consists of the Investor Grievance Committee are as per the following five directors who are eminent guidelines set out in the listing agreements with the professionals and possess sound knowledge in Stock Exchanges which inter alia include looking finance: into the investors complaints on transfer of shares, non receipt of declared dividends etc. and redressal Chairman : Mr. H K Agrawal thereof. Members : Mr. Rajeev Gupta Mr. Badri Agarwal Composition and names of members Mr. R Vasudevan Mr. Suresh Mathur The Share Transfer and Investor Grievance Committee is headed by an Independent director Meetings and attendance during the year and presently consists of the following members: The Audit Committee met five times during the Chairman : Mr. H K Agrawal st st financial year from 1 April, 2009 to 31 March, Members : Mr. R Vasudevan 2010: Mr. Suresh Mathur

Cosmo 14-35.p65 21 8/3/2010, 12:28 PM Meetings and attendance during the year Remuneration Paid to Directors The Share Transfer and Investor Grievance Following tables give the details of remuneration Committee met four times during the financial year paid to directors, during the year from 1st April, 2009 from 1st April, 2009 to 31st March, 2010: to 31st March, 2010:

1. 05th June, 2009 3. 30th October, 2009 Remuneration to Non-Executive Directors 2. 31st July, 2009 4. 28th January, 2010 S. No. Name of the Director Sitting Fees 1. Mr. Badri Agarwal 1,00,000 The attendance record of the Share Transfer and Investor Grievance Committee members is given in following table: 2. Mr. Hasmukh Shah 20,000 3. Mr. H K Agrawal 1,10,000 Names of the STIGC Number of STIGC 4. Mr. H L Paranjpe 30,000 members Meetings 5. Mr. Rajeev Gupta 1,10,000 Held during the Attended tenure of Directors 6. Mr. R Vasudevan 1,40,000 Mr. H K Agrawal 4 3 7. Dr. Surinder Kapur 10,000 Mr. R Vasudevan 4 4 8. Mr. H N Sinor 10,000 Mr. H L Paranjpe^ 1 1 9. Mr. Suresh Mathur 90,000 Mr. Suresh Mathur* 4 3 Remuneration to Executive Director - Mr. Ashok ^ Ceased to be a Director w.e.f. 25th June, 2009. Jaipuria, Chairman & Managing Director * Appointed as member of the STIGC Committee w.e.f. 05th June, 2009. Particulars (Rs. Crores) Compliance Officer Remuneration Salary 0.29 The Compliance Officer for this committee, at Commission 2.96 present, is Mr. Parvinder S Arora, Company Contribution to Provident & 0.05 Secretary. Superannuation Funds Shareholders' Complaints etc. received during Benefits 0.00 the FY- 2009-10 Total Amount 3.30 During the year from 1st April, 2009 to 31st March, D. GENERAL BODY MEETINGS: 2010 the Company received 28 complaints from Date / Venue / Time of previous three Annual General various Investors / Shareholders' relating to non- Meetings: receipt of Dividend / Bonus Shares / Transfer of Shares / Dematerialisation of Shares / Annual Year Place Date Time Report etc. The same were attended to the 2006-07 Shah Auditorium, 31/07/2007 3:00 P.M. st satisfaction of the Investors. At the end of 31 2, Raj Niwas Marg, March, 2010, no complaint was pending for Civil Lines, Delhi 54 redressal and there were no pending share 2007-08 Shah Auditorium, 24/07/2008 1:45 P.M. st transfers as on 31 March, 2010. 2, Raj Niwas Marg, 3. REMUNERATION COMMITTEE Civil Lines, Delhi 54 2008-09 Shah Auditorium, 25/08/2009 1:30 P.M. At present Company is not having Remuneration 2, Raj Niwas Marg, Committee. Civil Lines, Delhi 54 Remuneration Policy 1. No special resolution was passed in the previous The Non-executive directors are paid only the sitting three Annual General Meetings. fees of Rs.10,000/- for attending each Board and 2. No Special Resolution was passed through postal Committee meeting thereof. ballot, during the previous three years.

Cosmo 14-35.p65 22 8/3/2010, 12:28 PM E. DISCLOSURES: 8. Management Discussion and Analysis Report - The Management Discussion and Analysis has 1. Related Party Transactions: There have been no been discussed in detail separately in this Annual materially significant related party transactions, Report on page No. 17. pecuniary transactions or relationships between Cosmo Films and its directors for the year ended 9. Compliance Certificate from Statutory Auditors: 31st March, 2010 other than those listed in note no. Certificate from Statutory Auditors confirming 21 in Schedule 20 to the annual accounts on page compliance with conditions of corporate governance No. 52. as stipulated in clause 49 of the listing agreement, is annexed to this report. 2. The Company has complied with the requirements of Stock Exchanges or SEBI on matters related to 10. Other disclosures as required under clause 49 have Capital Markets, as applicable. No penalty was been given at relevant places in the Annual Report. levied by these authorities in last three years. F. MEANS OF COMMUNICATION / INVESTORS' COMMUNICATION 3. Code of Conduct: The Company has adopted a Code of Conduct for the members of the Board of The Company is sending Quarterly Investors Newsletter Directors and the senior management of the (which also include quarterly / half yearly / yearly audited Company. The Code of Conduct is displayed on financial results) after taking on record of these quarterly the website of the Company. All the directors and / half yearly / yearly audited financial results by the the senior management personnel have affirmed Board. The newsletter is also being posted at our compliance with the code for the financial year website www.cosmofilms.com. st ended 31 March, 2010. A declaration to this effect, The Company normally publishes its quarterly / half signed by the Chairman & Managing Director is yearly / yearly audited results in Economic Times and annexed to this report. one Hindi newspaper. The Company also ensures that 4. Compliance with Mandatory requirements of these Results are promptly and prominently displayed clause 49 of the listing agreement: on the Company's website www.cosmofilms.com. The Company has complied with all the applicable G. INFORMATION TO SHAREHOLDERS mandatory requirements of clause 49 of the listing 1. REGISTERED AND CORPORATE OFFICE agreement. 1008, DLF Tower-A, 5. Compliance with Non-Mandatory requirements Jasola District Centre, New Delhi 110 025 of clause 49 of the listing agreement: 2. ANNUAL GENERAL MEETING The Company has fulfilled the following non- The date, time & venue of the next Annual General mandatory requirement of clause 49 of the listing Meeting and the next Book Closure date will be as agreement: per the Notice calling the Annual General Meeting. Whistle Blower Policy: The Company has adopted 3. FINANCIAL CALENDAR a Whistle Blower Policy that has since been st st implemented within the organisation. No Personnel Financial Year is 1 April, 2010 to 31 March, 2011 of the Company have been denied access to the and tentative schedule for approval of the quarterly audit committee. / half yearly / yearly financial results is given below: 6. The necessary certificate, pursuant to clause 49(V) Particulars Month (Tentative) of the listing agreement with stock exchanges, is Financial results for the 1st quarter August, 2010 annexed to this report. ending June 30, 2010 nd 7. The Company Secretary has a key role to play in Financial results for the 2 quarter November, 2010 and half year ending September 30, 2010 ensuring the Board procedures and statutory rd compliances are properly followed. A certificate Financial results for the 3 quarter February, 2011 from the Company Secretary indicating the and nine months ending December 31, 2010 compliance of Companies Act, 1956 and Listing Financial results for the last quarter and May, 2011 Agreement has been annexed to this report. financial year ending March 31, 2011

Cosmo 14-35.p65 23 8/3/2010, 12:28 PM 4. WEBSITE 7. INTERNATIONAL SECURITIES IDENTIFICATION NUMBER (ISIN) The address of the Company's web site is www.cosmofilms.com ISIN is a unique identification number of traded scrip. This number has to be quoted in each transaction 5. DIVIDEND PAYMENT DATE relating to the dematerialised equity shares of the Dividend on equity shares as recommended by the company. The ISIN number of the shares of Cosmo Board of Directors for the year ended 31st March, 2010, Films Ltd. is INE 757A01017 if approved at the ensuing Annual General Meeting, 8. ANNUAL LISTING FEE will be paid within the specified time period. Annual Listing Fee for the year 2009-10 has been paid 6. LISTING ON STOCK EXCHANGES to each of the above mentioned stock exchanges. There The names of the stock exchanges at which Company's are no arrears of listing fees with any of the said stock shares are listed as on 31st March, 2010 and details of exchanges till date. "Stock Codes" are as mentioned below: 9. DISTRIBUTION OF SHAREHOLDING AS ON Name of the Stock Exchange Stock Code MARCH 31, 2010 Bombay Stock Exchange Ltd. 508814 Following tables gives the data on shareholding National Stock Exchange of India Ltd. COSMOFILMS according to types of shareholders and class of shareholders:

Distribution of the shareholding according to the type of shareholders:

March 31, 2010 March 31, 2009 Particulars No. of Shares % (Holding) No. of Shares % (Holding) Promoters 8946039 46.02 8485717 43.65 Institutional Investors 1968296 10.12 2013841 10.36 Private Corporate bodies 1426864 7.34 1518472 7.81 Others 7098877 36.52 7422046 38.18 Total 19440076 100.00 19440076 100.00

Distribution of shareholding according to the number of shares:

No. of Equity March 31, 2010 March 31, 2009 Shares No. of % of No. of % of No. of % of No. of % of Shareholders shares share Shareholders shares share Capital Capital 1-500 17091 89.59 2228887 11.47 17281 89.83 2296829 11.81 501-1000 1097 5.75 872770 4.49 1120 5.82 883044 4.54 1001-2000 421 2.21 636735 3.28 423 2.20 635359 3.27 2001-3000 160 0.84 413036 2.13 129 0.67 334505 1.72 3001-4000 76 0.40 274390 1.41 69 0.36 247794 1.28 4001-5000 74 0.39 352639 1.81 63 0.33 301516 1.55 5001-10000 65 0.34 470764 2.42 62 0.32 460852 2.37 10001 and above 92 0.48 14190855 73.00 90 0.47 14280177 73.46 Total 19076 100.00 19440076 100.00 19237 100.00 19440076 100.00

Cosmo 14-35.p65 24 8/4/2010, 7:57 PM 10. MARKET PRICE DATA 12. DEMAT Monthly high and low prices of equity shares of the Your Company's equity shares are compulsorily traded company traded at The Bombay Stock Exchange in dematerialisation form by all categories of investors. Limited and National Stock Exchange of India Limited Equity shares of your Company are available for trading are given below: in the depository systems of both the Depositories viz. The National Securities Depositories Limited (NSDL) MONTH BSE NSE and The Central Depositories Service (India) Limited HIGH LOW HIGH LOW (CDSL). (Rs.) (Rs.) (Rs.) (Rs.) As on 31st March, 2010, 72.95% (i.e.1,41,80,723 equity Apr-09 77.20 61.65 79.95 61.60 shares) of the total equity share capital (i.e. 1,94,40,076 May-09 102.00 70.00 101.00 70.55 equity shares) were held in demat form, Jun-09 112.80 87.10 112.95 82.95 13. REGISTRAR AND SHARE TRANSFER AGENTS Jul-09 101.95 82.05 102.00 82.00 AND SHARE TRANSFER SYSTEM Aug-09 108.30 95.20 108.00 95.40 The Company has appointed a common Registrar i.e. Sep-09 120.90 98.00 120.60 92.00 Alankit Assignments Limited for share transfer and dematerialisation of shares. To expedite the process of Oct-09 115.00 102.75 114.80 102.55 share transfers the Board has delegated the power of Nov-09 108.90 97.05 109.20 97.50 share transfer to Alankit Assignments Limited viz. Dec-09 113.80 102.50 113.50 102.05 Registrar and Share Transfer Agents who will attend to Jan-10 129.50 108.10 134.00 106.40 the share transfer formalities at least once in fortnight. Their contact details are as follows; Feb-10 138.00 109.50 123.50 110.00 M/s Alankit Assignments limited Mar-10 123.10 112.25 126.20 113.05 2E/21, Alankit House, 11. SHARE PERFORMANCE IN COMPARISON TO BSE Jhandewalan Extension SENSEX AND NSE NIFTY New Delhi 110 055 a. COMPANY'S SHARE PRICE MOVEMENT VIS A Ph: +91 11 42541234 VIS BSE SENSEX Fax: +91 11 011-42541967 COSMO FILMS SENSEX Contact Person: Mr. R. Maurya 119.15 87.79% 17,527.77 77.01% 95.43% 14. PLANT LOCATIONS The addresses of the Company's plants are mentioned 63.62% elsewhere in this Annual Report. 15. ADDRESS FOR CORRESPONDENCE: 31.81% i. Investors' Correspondence may be addressed

0% to the following: Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Parvinder S Arora b. COMPANY'S SHARE PRICE MOVEMENT VIS A Company Secretary VIS NIFTY Cosmo Films Limited COSMO FILMS NIFTY 1008, DLF Tower-A, 114.95 81.17% 5,225.3 70.74% 95.43% Jasola District Centre, New Delhi 110 025 e-mail: [email protected] 63.62% Fax: 91-11-49494950

31.81% OR To the Registrar and Share Transfer Agent i.e. :

0% Alankit Assignments Limited at the address Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar mentioned elsewhere in this report.

Cosmo 14-35.p65 25 8/5/2010, 2:12 PM ii. Queries relating to the Financial Statements of the Company may be addressed to following: R K Gupta GM (Finance & Accounts) B-14/8-9, MIDC Area, Waluj Aurangabad - 431136, Maharashtra e-mail: [email protected]

ANNEXURES TO THE CORPORATE GOVERNANCE REPORT

ANNUAL DECLARATION OF COMPLIANCE OF CODE OF CONDUCT BY CEO

To The Board of Directors Cosmo Films Limited 1008, DLF Tower-A, Jasola District Centre, New Delhi 110 025

1. The Code of Conduct has been laid down for all the Board members and Senior Management and other employees of the Company.

2. The Code of Conduct has been posted on website of the Company.

3. The Board members and Senior Management personnel have affirmed compliance with the code of conduct for the year 2009-10.

New Delhi Ashok Jaipuria 5th July, 2010 Chief Executive Officer

Cosmo 14-35.p65 26 8/4/2010, 7:57 PM CERTIFICATE PURSUANT TO CLAUSE 49(V) OF THE LISTING AGREEMENT

To The Board of Directors Cosmo Films Limited

We, the undersigned hereby certify that:

(a) We have reviewed the financial statements and the cash flow statement for the Financial Year 2009-10 and 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 together present a true and fair view of the Company's affairs and are in Compliance with existing 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 2009-10 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 the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies.

(d) We have indicated to the auditors and the Audit Committee:

(i) Significant changes in internal control over financial reporting during the year;

(ii) Significant changes in accounting policies during the year and the same have been disclosed in the notes to the financial statements; and

(iii) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company's internal control system over financial reporting.

A. K. Jain Ashok Jaipuria Chief Financial Officer Chief Executive Officer

New Delhi 5th July, 2010

Cosmo 14-35.p65 27 8/4/2010, 7:57 PM CERTIFICATE FROM THE COMPANY SECRETARY

I, Parvinder S Arora, Company Secretary of Cosmo Films Limited ("i.e. company") confirm that the company has:

(i) Maintained all the statutory registers required under the Companies Act, 1956 ("the Act") and the Rules made there under.

(ii) Filed all the forms and returns and furnished all the necessary particulars to the Registrar of Companies and/or Authorities as required by the Companies Act, 1956.

(iii) Issued all notices required to be given for convening of Board Meeting and General Meeting, within the time limit prescribed by law.

(iv) Conducted the Board Meetings and Annual General Meeting as per the Act.

(v) Complied with all the requirements relating to the minutes of the proceedings of the meetings of the Directors and the Shareholders.

(vi) Made due disclosure required under the Act including those required in pursuance of the disclosure made by the Directors.

(vii) Obtained all necessary approvals of Directors, Shareholders, Central Government and other Authorities as per the requirements.

(viii) Paid dividend amounts to the Shareholders and unpaid dividend amounts, if applicable, have been transferred to the Investor Education and Protection Fund within the limits prescribed.

(ix) Complied with all the requirements of the Listing Agreement entered into with the Stock Exchange(s) in India.

(x) The company has also complied with other statutory requirements under the Companies Act, 1956 and other related statutes in force.

The certificate is given by the undersigned according to the best of his knowledge and belief, knowing fully well that on the faith and strength of what is stated above, full reliance will be placed on it by the Shareholders of the Company.

New Delhi Parvinder S Arora 5th July, 2010 Company Secretary

Cosmo 14-35.p65 28 8/3/2010, 12:28 PM AUDITORS' CERTIFICATE

We have examined the compliance of conditions of corporate governance by Cosmo Films Limited for the year ended on 31st March, 2010 as stipulated in clause 49 of the listing agreement of the said Company with stock exchange(s).

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

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of corporate governance as stipulated in the above mentioned listing agreement.

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

For B.K.SHROFF & CO., Chartered Accountants Firm Registration No: 302166E

New Delhi O. P. Shroff 5th July, 2010 Partner Membership No: 6329

Cosmo 14-35.p65 29 8/3/2010, 12:28 PM PARTICULARS OF EMPLOYEES IN TERMS OF SECTION 217 (2A) OF THE COMPANIES ACT, 1956.

Name Designation & Gross Annual Qualification Years of Date of Age Last Designation Nature of Duties Remuneration Experience Commencement Employment of Employment Ashok Jaipuria Chairman & 3,30,08,000 Degree in 39 02.04.1980 57 - - Managing Director Associate of Arts in Business Admin. & Diploma in Marketing Science S Sundarram President 1,20,50,313 B.Tech. 27 10.11.2008 54 Esab Global Director (Global (IIT Madras), MBA Operations) (IIM Calcutta) A K Jain Chief Financial Officer 89,11,677 B. Com. (Hons.), 40 01.09.2008 59 Mawana Senior Vice AICWA, CISA Sugars Ltd. President Upal Roy Chief Strategy 66,19,856 B.Tech., MS, 18 20.08.2007 44 E.I.Dupont Marketing Officer MBA India P. Ltd. Manager A G Deshpande Vice President- 39,65,047 M.Sc. 34 19.04.1980 57 Rathi Papers Project/Plant Business Development Manager Janardan Gupta Vice President- 34,73,211 B.Com. 35 11.05.1981 57 Unitron Accounts Global Logistics Officer Sanjay General Manager 32,40,185 DME, DIM, DFM, 26 11.05.1987 45 Lupin Engineer Chincholikar (Marketing-Domestic) B.Com., MBA Laboratories Mechanical (Project & Maintenance) R K Gupta General Manager 27,26,737 B. Com. (Hons), 22 01.09.2008 47 Krishidhan VP (Finance & (Finance & Accounts) FCA Seeds Ltd. Accounts) Dr S Mishra General Manager 29,29,364 B.Sc., M.Sc., 23 12.05.2008 49 Garware Sr. GM (Business (Export Marketing) M. Phil, PhD Polyester Ltd. Development) Employed for Part of the Year Avinash Kulkarni Vice President 26,15,546 B.E. (Elect & 32 04.08.2005 55 Peerless VP (Supply chain (Manufacturing) Tel Com), MS Fabrikkerne and Operations) Tech. (Operation) S. Rekhi Vice President 18,62,591 B .Com., CA 21 09.11.2009 42 General Motors VP (Finance)&CFO (Finance) (I) Pvt Ltd. A. Kaura Head 6,33,572 B. Com., ICWAI 15 11.01.2010 39 Xchanging Head - IT & SAP (Information Technology Practice CIO Technology) Services (I) Pvt. Ltd. S Verma Head 1,12,834 B.Sc. (Engg.), 22.5 16.03.2010 44 Jindal Polyfilms AVP (Exports) (International Market PGDIT Ltd. development)

Notes: 1. Remuneration is as defined under section 198 of the Companies Act, 1956. 2. None of the employees mentioned above is related to any directors of the Company. 3. The appointment of Chairman & Managing Director is contractual.

Cosmo 14-35.p65 30 8/3/2010, 12:28 PM Corporate social responsibility

- Maintenance of Garden at Airport & Cantonment areas various creative programs e.g. painting workshop, in Aurangabad. poster exhibition etc. - Sponsored primary education of 20 children through - Conducted Career Guidance Program for students of "Bharti Samaj Sewak Sangh" 10th class. - Maintenance of dispensary for poor and needy patients - To strengthen the basic reading, writing and arithmetic skills of students, they were imparted training under By Cosmo Foundation: 'Cosmo Gyan Vihar Kendra.' - The foundation is regularly conducting computer literacy - Educational support to needy students of class VI to programmes through sustainable partnership with local Diploma courses. schools in and around Karjan (Vadodara). - Monetary support & mentoring to girls from marginalized - Organized celebration of festivals and national days. section of society, to pursue their academic and - Conducted value based education programs and vocational training.

Students learning Computer Children enjoying Christmas day celebrations

Cosmo 14-35.p65 31 8/3/2010, 12:28 PM Auditors’ report

1. We have audited the attached Balance Sheet of iii. The Balance Sheet, Profit & Loss Account and Cash COSMO FILMS LIMITED as at 31st March, 2010 and Flow Statement dealt with by this report are in also the Profit & Loss Account and the Cash Flow agreement with the books of account, Statement for the year ended on that date annexed iv. In our opinion, the Balance Sheet, Profit & Loss thereto. These financial statements are the Account and Cash Flow Statement dealt with by responsibility of the company's management. Our this report comply with the accounting standards responsibility is to express an opinion on these financial referred to in sub-section (3C) of section 211 of the statements based on our audit. Companies Act, 1956. 2. We conducted our audit in accordance with auditing v. On the basis of the written representations received standards generally accepted in India. Those standards from the directors and taken on record by the Board require that we plan and perform the audit to obtain of Directors, we report that none of the directors is reasonable assurance about whether the financial disqualified as on 31st March, 2010 from being statements are free of material misstatement. An audit appointed as a director in terms of clause (g) of includes examining, on test basis evidence supporting sub-section (1) of section 274 of the Companies the amounts and disclosures in the financial statements. Act,1956. An audit also includes assessing the accounting principles used and significant estimates made by vi. In our opinion and to the best of our information management, as well as evaluating the overall financial and according to the explanations given to us, the statement presentation. We believe that our audit said accounts give the information required by the provides a reasonable basis for our opinion. Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the 3. As required by the Companies (Auditor's Report) Order, accounting principles generally accepted in India: 2003 and the Companies (Auditor's Re- port)(Amendment) Order, 2004 issued by the Central a) In the case of the Balance Sheet, of the state Government of India in terms of sub-section (4A) of of affairs of the company as at 31st March, 2010 Section 227 of the Companies Act, 1956, we enclose b) In the case of the Profit & Loss Account, of the in the Annexure a statement on the matters specified profit for the year ended on that date and in paragraph 4 and 5 of the said order. c ) In the case of Cash Flow Statement, of the cash 4. Further to our comments in the Annexure referred to flows for the year ended on that date . above, we report that: i. We have obtained all the information and explanations, which to the best of our knowledge For B. K. SHROFF & Co., and belief were necessary for the purpose of our Chartered Accountants audit; Firm Registration No: 302166E ii. In our opinion, proper books of account as required O. P. Shroff by law have been kept by the company so far as New Delhi Partner appears from our examination of those books; 28th May, 2010 Membership No: 6329

Cosmo 14-35.p65 32 8/3/2010, 12:28 PM ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR (b) In our opinion and according to the explanations REPORT OF EVEN DATE given to us, the rate of interest and other terms and conditions on which loan was given to Cosmo Films (i ) (a) In our opinion, the company has maintained proper Inc. is prima facie not prejudicial to the interest of records showing full particulars including the company. Interest free loan was given to CF quantitative details and situation of fixed assets. Global Holdings Limited, a wholly owned subsidiary, (b) As explained to us, all the fixed assets have been as a temporary funding for acquisition of part of physically verified by the management according ACCO Brand business by its subsidiary. In view of to a regular program which in our opinion is major financial interest of the company involved the reasonable having regard to the size of the transaction is not prejudicial to the interest of the company and the nature of its assets. No material company. discrepancies with respect to book records were (c) In our opinion and according to the explanations noticed on such verification. given to us, the principal amount and interest is (c) In our opinion and according to explanations given being received as per stipulation, wherever to us, fixed assets disposed off during the year were applicable. not substantial and as such the disposal has not (d) In our opinion and according to the explanations affected the going concern concept of the company. given to us, there is no overdue amount in respect (ii) (a) As explained to us, physical verification of inventory of loan given by the company. (except material in transit and lying with third parties) (e) In our opinion and according to the explanations has been conducted by the management at given to us, the company has taken unsecured reasonable intervals. In our opinion, the frequency loans from companies, firms and other parties of verification is reasonable. covered in the register maintained under section (b) In our opinion, the procedures of physical 301 of the Companies Act, 1956 as per details given verification of inventory followed by the below: management are reasonable and adequate in Rs. Crores

relation to the size of the company and nature of its Name of Opening Amount Amount Closing Maximum business. the Company Balance received returned Balance amount during during outstanding (c) On the basis of our examination of the records of the year the year during the year Anginit Finance - 6.80 4.85 1.95 6.30 inventory, we are of the opinion that the company & Investments Ltd. is maintaining proper records of inventory. Discrepancies noticed on verification of inventory (f) In our opinion and according to the explanations as compared to book records were not material and given to us, the rate of interest and other terms and these have been properly dealt with in the books of conditions on which loans were taken by the accounts. company are prima facie not prejudicial to the (iii) (a) In our opinion and according to the explanations interest of the company. given to us, the company has granted unsecured (g) In our opinion and according to the explanations loans to companies, firms and other parties covered given to us, the company is regular in payment of in the register maintained under section 301 of the the principal amount and interest. Companies Act, 1956 as per details given below : (iv) In our opinion and according to the information and

Rs. Crores explanation given to us, there are adequate internal control procedures commensurate with the size of the Name of Opening Amount Amount Closing Maximum the Company Balance paid returned Balance amount company and the nature of its business for the during during outstanding the year the year during the year purchase of inventory and fixed assets and for the sale Cosmo Films Inc. 16.71 - 16.71 - 16.71 of goods and services. During the course of our audit, no major weaknesses have been noticed in the internal CF Global Holdings Ltd. - 73.34 73.34 - 73.34 control.

Cosmo 14-35.p65 33 8/4/2010, 7:58 PM (v) According to the information and explanations given prescribed maintenance of cost records under clause to us, we are of the opinion that during the year there (d) of sub section (i) of section 209 of the Companies are no contracts or arrangements referred to in section Act, 1956 in respect of products dealt with by the 301 of the Companies Act, 1956 that need to be company for the year under review. entered in the register required to be maintained under (ix) (a) According to the records of the company, the that section. Accordingly, para v (b) of the order is not company is generally regular in depositing with applicable. the appropriate authorities undisputed statutory (vi) In our opinion and according to the information given dues including Provident Fund, Investor Education to us, directions issued by the Reserve Bank of India and Protection Fund, Employees State Insurance, and the provisions of sections 58A and 58AA or any Income Tax, Wealth Tax, Service Tax, Sales Tax, other relevant provisions of the Companies Act, 1956 Custom Duty, Excise Duty, Cess etc. and any and the rules framed thereunder have been complied other statutory dues applicable to it. No undisputed with in respect of deposits accepted from public. No amounts payable were outstanding as at 31st order has been passed by the Company Law Board or March, 2010 for a period of more than six months National Company Law Tribunal or Reserve Bank of from the date they became payable. India or any Court or any other Tribunal. (b) According to the records of the company, dues of (vii) In our opinion, the company has an adequate internal Sale Tax / Income-Tax / Customs Duty / Wealth audit system commensurate with the size and the Tax /Service Tax/ Excise Duty / Cess which have nature of its business. not been deposited on account of any dispute are as follows; (viii) As explained to us the Central Government has not

Name of the statute Nature of the dues Amount Forum where dispute Rs. crores is pending Central Excise & Customs Act Excise duty 2.22 Appellate Tribunal Excise duty 0.62 Commissioner Appeals Maharastra Sales Tax Act 0.07 Sales Tax Tribunal Claim of 100% deferral/exemption 3.49 Commissioner Appeals benefits (Refer note no.11 on 9.21 Order received. notes on accounts) Appeal to be filed. 4.42 Assessment pending Gujarat Sales Tax Act Sales Tax 0.43 Commissioner Appeals Income Tax Act Income Tax & Penalty 1.40 Appellate Tribunal Income Tax & Penalty 6.78 Commissioner Appeals

Cosmo 14-35.p65 34 8/4/2010, 7:58 PM (x) According to the records of the company, the company (xvi) In our opinion, the term loans have been applied for neither has any accumulated losses at the end of the the purpose for which they were obtained. financial year nor has incurred any cash loss during (xvii) Based on our examination of the Balance Sheet of the financial year covered by our audit and in the the company as at 31st March, 2010, we report that immediately preceding financial year. the funds raised on short term basis have not been (xi) Based on our audit procedures and on the information used for long term investment. and explanations given by the management, we are (xviii) During the year the company has not made any of the opinion that the company has not defaulted in preferential allotment of shares to parties and repayment of dues to financial institutions or banks companies covered in the register maintained under or debenture holders. section 301 Companies Act, 1956. (xii) Based on our examination of documents and records (xix) During the year the company has not issued any maintained by the company, we are of the opinion debentures. that since the company has not granted any loan and advance on the basis of security by way of pledge of (xx) During the year no money was raised by public issue. shares, debenture and other securities, it is not (xxi) Based upon the audit procedure performed and required to maintain records in respect thereof. information and explanation given by the (xiii) The company is neither a chit fund nor nidhi / mutual management we report that during the year no fraud benefit fund / society and hence para (xiii) of the order on or by the company has been noticed or reported is not applicable. by the management. (xiv) In our opinion the company is not dealing in or trading in shares, securities, debentures and other For B.K. SHROFF & CO. investments and hence para (xiv) of the order is not Chartered Accountants applicable. Firm Registration No: 302166E (xv) Based on our examination of the records, we are of the opinion that the terms and conditions of the O. P. Shroff corporate guarantee given by the company for its step New Delhi Partner down subsidiaries are prima facie not prejudicial to 28th May, 2010 Membership No: 6329 the interest of the company.

Cosmo 14-35.p65 35 8/4/2010, 7:58 PM COSMO FILMS LIMITED

Balance sheet as at 31st March, 2010

Schedule Current Year Previous Year Rs. Crores Rs. Crores SOURCES OF FUNDS SHAREHOLDER’S FUND Share Capital 1 19.44 19.44 Reserves & Surplus 2 272.25 237.84 291.69 257.28 EQUITY SHARE WARRANTS - 3.32 (Refer note no. 7 on schedule 20) LOAN FUNDS Secured Loans 3 252.99 264.74 Unsecured Loans 4 11.96 0.01 264.95 264.75 DEFERRED TAX 66.78 64.96 623.42 590.31 APPLICATION OF FUNDS FIXED ASSETS 5 Gross Block 587.51 598.35 Less: Depreciation 213.29 185.71 Net Block 374.22 412.64 Add: Capital work in progress 1.92 0.75 376.14 413.39 INVESTMENTS 6 51.26 6.77 CURRENT ASSETS,LOANS AND ADVANCES Inventories 7 67.93 58.42 Sundry Debtors 8 130.96 93.36 Cash & Bank Balances 9 24.16 29.32 Loans & Advances 10 37.80 55.21 260.85 236.31 LESS : CURRENT LIABILITIES AND PROVISIONS Current Liabilities 11 51.60 52.36 Provisions 12 13.23 13.80 64.83 66.16 NET CURRENT ASSETS 196.02 170.15 MISCELLANEOUS EXPENDITURE 13 - - (To the extent not written off or adjusted) 623.42 590.31

SIGNIFICANT ACCOUNTING POLICIES 19 NOTES ON ACCOUNTS 20

Schedules 1 to 20 form an integral part of the accounts As per our report of even date annexed For B. K. SHROFF & CO. Chartered Accountants O. P. Shroff Parvinder S Arora A. K. Jain H. K. Agrawal Ashok Jaipuria Partner Company Secretary Chief Financial Director Chairman & Officer Managing Director New Delhi DIN. 260592 DIN. 214707 28th May, 2010

Cosmo 36-60.p65 36 8/4/2010, 7:58 PM Profit & loss account for the year ended 31st March, 2010

Schedule Current Year Previous Year Rs. Crores Rs. Crores INCOME Gross Sales 782.86 693.02 Less: Excise duty recovered 29.60 38.21 Net Sales 753.26 654.81 Other Incomes 14 7.23 12.92 760.49 667.73 EXPENDITURE (Increase)/Decrease in stocks 15 (2.02) (5.48) Purchases 0.03 0.23 Manufacturing and Other expenses 16 656.24 568.71 Depreciation 28.92 20.80 683.17 584.26 Profit before Interest, Exceptional item and Tax (EBIT) 77.32 83.47 Interest 17 15.02 13.79 Profit before Exceptional item and Tax 62.30 69.68 Exceptional item net of depreciation of Rs. nil (previous year Rs. 0.14 crores) - (5.06) Profit before Tax (PBT) 62.30 64.62 Provision - Current Tax 14.66 11.47 - Fringe Benefit Tax - 0.45 - Deferred Tax 1.82 9.96 Profit after Tax (PAT) 45.82 42.74 Extraordinary item net of deferred tax of Rs. nil (previous year Rs. 23.03 crores) (1.22) 44.72 (Refer note no.17 on schedule 20) Profit after Tax including Extraordinary item 44.60 87.46 APPROPRIATION Proposed Dividend on Equity Shares 9.72 9.72 Corporate Tax on Dividend 1.61 1.65 Transfer to General Reserve 33.27 76.09 44.60 87.46 Basic earning per share (Rs.) - Excluding Extraordinary item 18(a) 23.57 21.98 - Including Extraordinary item 18(b) 22.94 44.99 Diluted earning per share (Rs.) - Excluding Extraordinary item 18(a) 23.57 21.98 - Including Extraordinary item 18(b) 22.94 44.99 SIGNIFICANT ACCOUNTING POLICIES 19 NOTES ON ACCOUNTS 20 Schedules 1 to 20 form an integral part of the accounts As per our report of even date annexed For B. K. SHROFF & CO. Chartered Accountants O. P. Shroff Parvinder S Arora A. K. Jain H. K. Agrawal Ashok Jaipuria Partner Company Secretary Chief Financial Director Chairman & Officer Managing Director New Delhi DIN. 260592 DIN. 214707 28th May, 2010

Cosmo 36-60.p65 37 8/4/2010, 7:58 PM Cash flow statement for the year ended 31st March, 2010

Schedule Current Year Previous Year Rs. Crores Rs. Crores A. Cash Flow from Operating Activities Profit before tax 62.30 64.62 Add : Adjustments for Depreciation 28.92 20.80 Miscellaneous Expenditure written off - 0.02 Interest 15.02 13.79 (Profit)/Loss on sale of Fixed assets 0.26 0.41 Depreciation relating to exceptional item - (0.14) Operating Profit before Working Capital changes 106.50 99.50 Adjustments for change in Working Capital Trade & Other Receivables (36.71) (5.50) Inventories (9.51) 12.01 Trade & Other Payables (3.47) 9.71 Cash generated from operations 56.81 115.72 Direct Taxes paid (16.07) (13.29) Net Cash from Operating Activities 40.74 102.43 B. Cash Flow from Investing Activities Purchase of Fixed Assets (6.20) (153.43) Sales of Fixed Assets 0.76 0.62 Loan to a subsidary 16.71 (16.71) (Purchase)/Sale of Investments (44.49) - Net Cash from Investing Activities (33.22) (169.52) C. Cash Flow from Financing Activities Proceeds from Long Term Borrowings (26.48) 108.00 Proceeds from Working Capital Borrowings 28.24 7.64 Proceeds from other Short Term Borrowings 11.95 (0.99) Interest paid (15.02) (13.79) Dividend paid (9.72) (9.72) Corporate tax on dividend (1.65) (1.88) Net Cash from Financing activities (12.68) 89.26 Net increase in cash or cash equivalents (5.16) 22.17 Cash or cash equivalents (Opening balance) 29.32 7.15 Cash or cash equivalents (Closing balance) 24.16 29.32 NOTE : Figures in bracket represents cash outflow. Significant Accounting Policies 19 Notes on Accounts 20

Cosmo 36-60.p65 38 8/4/2010, 7:58 PM Schedules (forming part of the accounts)

Current Year Previous Year Rs. Crores Rs. Crores 1. SHARE CAPITAL Authorised 2,50,00,000 Equity shares of Rs.10 each 25.00 25.00

Issued, Subscribed and paid-up 1,94,40,076 Equity shares of Rs.10 each fully paid up 19.44 19.44 19.44 19.44 Of the above, a) 2,42,051 shares have been alloted to erstwhile shareholders of Gujarat Propack Limited on amalgamation. b) 84,86,705 shares have been alloted as fully paid bonus shares by capitalisation of capital reserve and share premium account. Balance as Additions Deductions Balance as at 1.4.2009 at 31.03.2010 Rs. Crores Rs. Crores Rs. Crores Rs. Crores 2. RESERVES AND SURPLUS Share Premium Account 31.26 - - 31.26 Capital Reserve - 3.32 - 3.32 Hedging Reserve - - 2.18 (2.18) General Reserve 206.58 33.27 - 239.85 237.84 36.59 2.18 272.25

Current Year Previous Year Rs. Crores Rs. Crores 3. SECURED LOANS A. From Financial Institutions Rupee Term Loans (a) - 2.87 B. From Banks Foreign Currency Loans (a) 42.03 56.87 Foreign Currency Loans (b) 52.97 64.25 Rupee Term Loans (a) 32.95 44.32 Cash Credit/Working Capital Demand Loans (c) 120.61 93.68 Cash Credit/Overdraft (d) 3.16 1.85 Vehicle Loan (e) 1.27 0.90 252.99 264.74 (a) Secured by first pari-passu charge over the entire fixed assets of the company except assets exclusively charged. (b) Secured against hypothecation of machinery financed out of the loan amount. (c) Secured by hypothecation of raw materials, work-in-progress,stores and spares, finished goods, book debts and second charge on fixed assets secured to financial institutions except assets exclusively charged. (d) Secured against pledge of the fixed deposits of the company. (e) Secured against hypothecation of vehicle financed out of the loan amount. Note : Term loans due within a year Rs. 30.55 crores (previous year Rs. 35.04 crores) Current Year Previous Year Rs. Crores Rs. Crores 4. UNSECURED LOANS Fixed Deposits 0.01 0.01 Short Term Loans and Advances From Banks (*Rs. 13209) 10.00 * From Others 1.95 - 11.96 0.01 Note : Fixed deposits due within a year Rs. 0.01 crores (previous year Rs. 0.01 crores)

Cosmo 36-60.p65 39 8/4/2010, 7:58 PM 4.67 3.34 0.87 1.54 1.14 0.63 412.64 4.68 3.50 0.92 1.52 1.13 0.67 1.92 0.75 NET BLOCK As at As at f depreciation and 376.14 413.39 31.03.2010 31.03.2009 - 1.25 7.94 1.52 0.06 0.07 - - 12.47 42.56 43.74 - - 0.95 0.02 0.01 1.34 213.29 374.22 0.36 189.98 319.24 356.71 Adjustments Total - 0.59 0.48 0.14 2.00 0.02 0.01 year DEPRECIATION - o For the 1.61 7.48 1.39 0.04 0.06 31.03.2009 5.93 2.44 1.58 1.20 0.67 - 55.03 10.47 - - - 1.41 0.05 11.44 0.03 1.48 598.35 233.26 20.80 68.35 185.71 Adjustments - - 1.06 0.67 0.82 0.21 2.23 14.38 509.22 164.66 25.68 5.03 15.87 587.51 185.71 28.92 0.04 ditions Sales/ Total Upt GROSS BLOCK GROSS 6.28 1.20 1.58 0.63 2.26 As atAs Ad 54.21 10.82 521.37 598.35 436.75 163.08 Rs. CroresRs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. 01.04.2009 ** ear Office Equipment reehold terms of agreement to sell. Conveyance Deed is yet to be registered. Besides, the amount includes cost of shares of the said society received by the terms of agreement to sell. Conveyance Deed is yet be registered. Besides, the amount includes cost shares said society Company which are yet to be transferred in the name of Company. Rs. nil (previous year Rs. 0.14 crores) on exchange rate difference of liability for acquisition of assets. of liability for rate difference 0.14 crores) on exchange Rs. year nil (previous Rs. difference (net). - Leasehold (b) Includes cost of 5 shares Rs. 50 each Pluto Apartment Co-operative Housing Society Ltd. paid as part flat. (b) change in method o 67.75 crores) on account of retrospective Rs. year nil (previous Adjustments in depreciation includes Rs. (c) 0.93 crores ) on account of exchange includes Rs. addition in gross block year 13.51 crores (previous includes Rs. block Sales / adjustments in gross Vehicles Factory & Factory Buildings * Furniture, Fixture & Fittings Plant & Machinery Land & Buildings ** (a) Additions are net of interest received from banks Rs. nil (previous year 0.24 crores) earned on funds for capital expenditure. 5. FIXED ASSETS Particulars Land - F y Previous Capital work in progress *** * (a) Includes Rs. 0.64 crores towards cost of residential space in a Co-operative Housing Society. The Company has taken possession the same *** Capital-work-in progress includes Rs. nil (previous year 0.37 crores) on account of advance against capital expenditure.

Cosmo 36-60.p65 40 8/4/2010, 7:58 PM No of shares / Units Face Current Year Previous Year Current Year Previous Year Value Rs. Crores Rs. Crores 6. INVESTMENTS Long Term Investments in Equity shares a) In Subsidiary Companies (Unquoted - Trade) Cosmo Films, inc. - 1500 $0.01 - 1.22 CF Global Holdings Ltd. 9500000 - $1.00 45.71 - b) Other Investments (Quoted - Non-trade) Cosmo Ferrites Ltd. 5,548,475 5,548,475 Rs.10 5.55 5.55 51.26 6.77 Aggregate book value of quoted investments 5.55 5.55 Aggregate book value of unquoted investments 45.71 1.22 51.26 6.77 Aggregate market value of quoted investments 6.77 2.96

Note : The company has given a non-disposal undertaking to the financial institutions in respect of shares held in Cosmo Ferrites Ltd. and CF Global Holdings Ltd.

Cosmo 36-60.p65 41 8/4/2010, 7:58 PM Current Year Previous Year Rs. Crores Rs. Crores 7. INVENTORIES (As taken, valued and certified by the management) Raw material (including material in transit Rs. 6.69 crores, previous year nil) 28.78 23.91 Stores & spares (including material in transit Rs. 0.72 crores, previous year nil) 17.92 15.30 Finished goods (including material in transit Rs. 3.01 crores, previous year Rs. 7.33 crores) 20.94 18.98 Stock-in-Process 0.29 0.23 67.93 58.42

8. SUNDRY DEBTORS * (Unsecured) Exceeding six months Considered good 16.99 29.33 Considered doubtful 0.21 - 17.20 29.33 Less: Provision for doubtful debts 0.21 - 16.99 29.33 Others Considered good 113.97 64.03 130.96 93.36 *Includes amount receivable from subsidiary Rs. 59.75 crores (previous year Rs. 48.95 crores)

9. CASH & BANK BALANCES Cash, Cheques in hand & Remittances in transit 2.05 0.02 Balances with Scheduled Banks In Current / Cash Credit Account 5.39 1.47 In Fixed Deposit/Margin Money Account* 16.72 27.83 24.16 29.32

*Includes Rs. 11.68 crores (previous year Rs. 12.68 crores) held with a bank in India out of ECB borrowings for capital expenditure.

10. LOANS & ADVANCES (Unsecured -considered good unless otherwise stated) Loan to a subsidary - 16.71 Advances (recoverable in cash or in kind or for value to be received)* 29.19 28.60 Balances with Central Excise/Customs authorities 3.88 5.65 Security Deposits 0.64 0.35 Tax deducted at Source / Advance Tax (net of provision of Rs.14.66 Crores, previous year Rs.11.81 crores) 4.09 3.90 37.80 55.21

*Includes (i) amount due from directors & officers Rs. nil (previous year nil) (ii) maximum amount due at any time Rs. nil (previous year nil)

Cosmo 36-60.p65 42 8/4/2010, 7:58 PM Current Year Previous Year Rs. Crores Rs. Crores 11. CURRENT LIABILITIES Sundry Creditors * 16.95 19.20 Other Liabilities ** 34.15 31.42 Trade Deposits 0.05 0.07 Interest accrued but not due on loans 0.45 1.67 51.60 52.36 * (i) amount payable to subsidiary Rs. 0.17 crores (previous year Rs. 0.27 crores) (ii) dues of micro enterprises and small enterprises (refer note no.16 on schedule 20) ** (i) amount payable to subsidiary Rs. 0.97 crores (previous year nil) (ii) amount to be credited to investor education and protection fund (refer note no.14 on schedule 20) (iii) includes mark to market loss on interest rate swap contract of Rs. 2.18 crores (previous year nil) (refer note no.9 on schedule 20)

12. PROVISIONS For proposed dividend 9.72 9.72 For corporate tax on dividend 1.61 1.65 For gratuity - 0.94 For leave encashments 1.90 1.49 13.23 13.80 13. MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) SHARE/DEBENTURE ISSUE EXPENSES As per last Balance Sheet - 0.02 Less : Written off during the year - 0.02 -- - PRELIMINARY EXPENSES As per last Balance Sheet (*Rs 22958) - * Less: Written off during the year (*Rs 22958) - * -- -- 14. OTHER INCOMES Interest on deposits with banks 0.84 0.70 Interest received on loans and deposits 0.09 0.05 Insurance & other claims 0.32 0.16 Miscellaneous receipts 2.13 2.11 Bad debts recovered 0.04 - Exchange rate fluctuation (net) 0.45 7.82 Excess Provisions / Liabilities no longer required written back 3.36 2.08 7.23 12.92 15. INCREASE/(DECREASE) IN STOCKS Closing stocks Finished goods 20.94 18.98 Stock in process 0.29 0.23 21.23 19.21 Opening stocks Finished goods 18.98 12.06 Stock in process 0.23 1.67 19.21 13.73 Increase/(Decrease) in Stocks 2.02 5.48

Cosmo 36-60.p65 43 8/4/2010, 7:58 PM Current Year Previous Year Rs. Crores Rs. Crores 16. MANUFACTURING AND OTHER EXPENSES Raw Materials consumed 469.54 406.66 Stores, Spares & Packing material 35.68 27.73 Power, Water & Fuel 53.35 47.72 Other Manufacturing expenses 0.44 0.54 Excise duty 4.10 5.81 Salaries, Wages, Bonus & Other benefits 34.29 31.30 Gratuity 1.26 1.35 Contribution to Provident / Superannuation Funds, Employees State Insurance etc. 2.58 2.28 Staff Welfare expenses 0.78 0.60 Training & Recruitment expenses 0.52 0.44 Rent 1.14 0.56 Rates & Taxes 0.10 0.17 Insurance 0.41 0.63 Printing & Stationary 0.38 0.24 Bank & financial charges 2.17 4.02 Travelling & Conveyance 3.75 2.98 Vehicle Running & Maintenance 1.43 1.33 Communication expenses 0.96 0.84 Repairs & Maintenance Plant & Machinery 3.71 2.93 Building 0.89 0.37 Others 1.94 6.54 1.43 4.73 Legal & professional charges 1.88 3.03 Directors’ Fees 0.06 0.05 Charity & Donations 0.21 0.10 Miscellaneous expenses 0.97 0.89 Auditors’ Remunaration As Audit fees 0.11 0.11 As Quarterly Audit fees 0.10 0.10 As Tax Audit fees 0.02 0.02 In Other capacity 0.01 0.01 Out of pocket expenses 0.01 0.25 0.01 0.25 Freight & Forwarding 25.84 21.88 Selling Commission 4.41 2.43 Other Selling expenses 0.73 1.06 Bad Debts/advances written off 0.07 0.93 Provision for Bad Debts 0.21 - Claims paid/written off (*Rs.10861) 0.06 * Sales Tax payments 2.16 2.77 Loss on sale of raw material (net) 0.01 - Loss on fixed assets sold/discarded (net) 0.26 0.41 Miscellaneous expenditure written off - 0.02 656.54 573.75 Less: Pre-operative expenditure capitalized 0.30 5.04 656.24 568.71

Cosmo 36-60.p65 44 8/4/2010, 7:58 PM Current Year Previous Year Rs. Crores Rs. Crores 17. INTEREST On Term Loans 7.80 7.59 To Banks & others 7.46 9.67 15.26 17.26 Less: Received from subsidiary 0.24 0.18 15.02 17.08 Less: Pre-operative expenditure capitalized - 3.29 15.02 13.79

18. BASIC AND DILUTED EARNING PER SHARE (a) Excluding Extraordinary item Profit after tax excluding extraordinary item 45.82 42.74 Number of equity shares outstanding during the year 19,440,076 19,440,076 Basic earning per share (Rs.) 23.57 21.98 Diluted earning per share (Rs.) 23.57 21.98

(b) Including Extraordinary item Profit after tax including extraordinary item 44.60 87.46 Number of equity shares outstanding during the year 19,440,076 19,440,076 Basic earning per share (Rs.) 22.94 44.99 Diluted earning per share (Rs.) 22.94 44.99

Note : Employee stock option scheme is yet to be framed. There is no dilution.

Cosmo 36-60.p65 45 8/4/2010, 7:58 PM 19. SIGNIFICANT ACCOUNTING POLICIES is charged against the profit of the year in which it is incurred. Capital expenditure on research and a. METHOD OF ACCOUNTING development is shown as an addition to fixed The accounts of the company are prepared under assets. the historical cost convention using the accrual g. FOREIGN CURRENCY TRANSACTIONS method of accounting unless otherwise stated hereafter. Accounting policies not specifically Foreign currency loans availed for acquisition of referred to are consistent with generally accepted fixed assets are converted at the rate prevailing on accounting principles. the due date for installments repayable during the year and at the rate prevailing on the date of balance b. FIXED ASSETS sheet for the outstanding loan. The fluctuation is Fixed assets are stated at cost of acquisition, adjusted in the original cost of fixed assets. inclusive of inward freight, duties & taxes and Foreign currency current assets and liabilities are incidental expenses related to acquisition and are converted into rupee at the exchange rate prevailing net of CENVAT credit. In respect of major projects on the balance sheet date and the resultant gains/ involving construction, related preoperational losses are reflected in the profit and loss account. expenses form part of the value of the assets capitalized. Wherever forward contracts have been taken the exchange conversion is made at the contracted c. INVESTMENTS rate. Gains/losses arising out of cancellation of Long-term investments are stated at cost of forward contracts are treated as a revenue item. acquisition. Provision for diminution in the value of h. EXCISE & OTHER DUTIES long-term investment is made only if; such a decline is other than temporary in the opinion of the Excise duty in respect of finished goods lying in management. factory premises and custom duty on imported goods lying in custom bonded warehouse are d. INVENTORIES provided and included in the valuation of inventory. Inventories are valued at lower of cost or net CENVAT benefit is accounted for by reducing the realizable value after providing for cost of purchase cost of the materials/fixed assets. Import obsolescence and other anticipated losses duty benefits on exports made by the company are wherever considered necessary. Cost is determined accounted for as export incentives. These on weighted average basis. Finished goods include accounting treatments have no impact on the profit/ cost of conversion and other costs incurred in loss for the year. bringing the inventories to their present location and i. EMPLOYEES condition. Company's contribution to defined contribution e. DEPRECIATION plans and state plans are charged to revenue every Depreciation is calculated on leased and other fixed year. Liability of obligation under defined benefit assets on straight-line method in accordance with plans is determined on the basis of an actuarial schedule XIV of Companies Act, 1956 as amended. valuation at the end of the year. Actuarial gains and Leasehold land is also being depreciated over the losses comprises of experience adjustments and lease period. the effects of changes in actuarial assumptions and are recognized immediately in the profit and loss In respect of land and building, where no separate account as income or expense. valuation is available, depreciation has been provided on the total value of land and building. Liability towards additional payment in respect of salary, wages and bonus, if any, is debited to Profit f. RESEARCH AND DEVELOPMENT & Loss Account in the year in which the agreement Revenue expenditure on research and development is finalized with employees.

Cosmo 36-60.p65 46 8/4/2010, 7:58 PM j. TAXATION p. BORROWING COSTS Provision for Income Tax is based on assessable Borrowing costs that are directly attributable to the profits of the company as determined under the acquisition, construction or production of qualifying Income Tax Act, 1961. asset are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an k. DEFERRED TAXATION expense in the period in which they are incurred. Deferred taxation is provided using the liability Capitalization of borrowing costs ceases when method in respect of the taxation effect arising from substantially all the activities necessary to prepare all material timing differences between the the qualifying assets for its intended use are accounting and tax treatment of income and complete. expenditure which are expected with reasonable q. EARNING PER SHARE probability to crystallize in foreseeable future. Basic earning per share is calculated by dividing Deferred tax benefits are recognized in the financial the net profit for the year attributable to equity statements only to the extent of any deferred tax shareholders by the weighted average number of liability or when such benefits are reasonably equity shares outstanding during the year. expected to be realizable in the near future. Diluted earning per share is calculated by dividing l. MISCELLANEOUS EXPENDITURE the net profit attributable to equity shareholders by Share/debenture issue expenses and preliminary the weighted average number of equity shares expenses are being proportionately written off over outstanding during the year (adjusted for the effects a period of ten years. of dilutive options) m. INCOME FROM SALES r. IMPAIRMENT OF ASSETS Exports are accounted for on the basis of the date Impairment loss is provided to the extent the of bill of lading/airways bill. Domestic sales are carrying amount of assets exceeds their accounted for on dispatch from factory. recoverable amount. Recoverable amount is the Sales are inclusive of export incentives/ benefits higher of an asset's net selling price and its value and are net of rebates and discounts. in use. Value in use is the present value of estimated further cash flows expected to arise from the n. INCOME FROM INVESTMENTS/DEPOSITS continuing use of an asset and from its disposal at Income from investments is credited to revenue in the end of its useful life. the year in which it accrues. Income is stated in full s. CONTINGENT LIABILITIES with the tax thereon being accounted for under advance tax. Un-provided contingent liabilities are disclosed in the accounts by way of notes giving nature and o. CLAIMS AND BENEFITS quantum of such liabilities. Claims receivable and export benefits are accounted on accrual basis to the extent considered receivable.

Cosmo 36-60.p65 47 8/4/2010, 7:59 PM 20. NOTES ON ACCOUNTS

Current Year Previous Year Rs. Crores Rs. Crores 1. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for 11.70 0.12 2. Contingent Liabilities not provided for in respect of a) Bank guarantees (including deferred guarantees) 4.31 5.23 b) Disputed demands for Income tax, Sales Tax, Excise duty, etc. 15.32 6.55 c) Claims against the company not acknowledged as debts 1.54 -

3. The company has received Rs. 5.57 crores (previous 8. The company in its extra-ordinary general meeting held year Rs. 7.86 crores) on discounting of letter of credits on 11th January, 2008 resolved to issue and allot equity which have been reduced from debtors in these shares not exceeding 1000000 in number under accounts. 'Employee Stock Option Scheme' at such price and at such time as may be decided by the board. No equity 4. The company has opened Letter of credit for Rs. 19.57 shares have been issued or allotted. crores (Previous year Rs. 18.97 crores) for which the material has not been shipped as on the date of the 9. The company has entered into interest rate swap Balance sheet. contract (floating rate to fixed rate) to hedge its risk associated with LIBOR fluctuations. In accordance with 5. Figures for previous year have been regrouped / Accounting Standard 30, "Financial Instruments - rearranged wherever considered necessary. recognition and measurement" the mark to market loss 6. In respect of capital goods imported under EPCG as on 31st March, 2010 is estimated at Rs. 2.18 crores Scheme, the company has executed bonds of on such instruments which qualify as effective hedges. Rs. 224.52 crores in favour of the President of India for 10. a. The company has given corporate guarantee for import at a concessional rate of custom duty. The term loan facility of USD 14 million availed by its company is under an obligation to export products for step down subsidiary. Rs. 737.43 crores (FOB) within a period of eight years from the date of issue of license i.e. 16.09.2008 for b. A step down subsidiary is to pay a sum of USD import of capital goods. The company has exported 3.65 mn to ACCO Brand towards balance amount goods worth Rs. 122.84 crores (FOB) till 31.03.2010. of purchase consideration for which company has given corporate guarantee. 7. In terms of the approval of the shareholders of the company and as per the applicable statutory provisions, 11. The company has claimed/will claim 100% Deferral/ the company on 4th February, 2008, has issued and Exemption benefits under sales tax for the financial allotted 3100000 warrants convertible into same years from 1996-97 to 2009-10 on the basis of decision number of equity shares of the company of Rs. 10 each of the Hon'ble First Bench of the Maharashtra Sales at a price of Rs. 107 (including a premium of Rs. 97) Tax Tribunal at Mumbai in case of M/s Pee Vee Textile per warrant on preferential basis to the persons Ltd. and VIP Industries Ltd. The said benefits have not belonging to promoter group of the company. The been allowed to the company for the financial years warrant holders have paid Rs. 10.70 per warrant. The 1996-97 to 2004-05 and the company has gone in warrant holders have a right to apply for equity shares appeal (for financial year 2004-05 appeal is to be filed) of the company at any time within 18 months from the and for the financial years 2005-06 to 2008-09 VAT date of allotment of warrants. Due to non exercise of audit report has been filed and for the financial year option within the stipulated time, the company has 2009-10 quarterly returns have been filed. The company cancelled the warrants and forfeited the amount of has received demand of Rs. 12.77 crores (previous year advance paid on warrants and credited the amount to Rs. 0.07 crores) in respect of financial years for which Capital Reserve account in accordance with the assessment has been completed against which generally accepted accounting principles. provision of Rs.10.12 crores (previous year Rs. 10.12

Cosmo 36-60.p65 48 8/4/2010, 7:59 PM crores) is available in these accounts. Besides, provision and charged to profit & loss account) which has not of Rs. 4.42 crores (previous year Rs. 3.63 crores) is been considered in these accounts. available in respect of financial years for which 12. In pursuance of Accounting Standard on Impairment assessment is to be completed. on Assets (AS-28) issued by Institute of Chartered Based upon legal opinion received and Hon'ble Accountants of India the company had identified and Maharashtra Sales Tax Tribunal Mumbai judgments impaired certain assets / cash generating units. There is no further impairment / reversal during the year. for financial years 1996-97,1997-98 and 2001-02 setting aside the order of the first appellate authority 13. Segments have been identified in accordance with and remanding the matter back to the first appellate Accounting Standard on Segment Reporting (AS-17) authority to decide afresh the matter following Mumbai taking into account the organization structure as well High court judgement in the case of M/s Pee Vee as differential risks and returns of these segments. Textiles Ltd, the company is hopeful that the matter a) Business segment has been disclosed as the will be decided in its favour. Consequent upon primary segment. The company is organized into favourable judgment, the company will be entitled to two business segments namely Packaging Films an income of Rs. 20.84 crores (including amount paid and Others.

Rs. Crores Particulars Packaging Films Others Total Sales Revenue 753.18 0.08 753.26 (654.39) (0.42) (654.81) Other income 7.23 - 7.23 (12.92) (-) (12.92) Total 760.41 0.08 760.49 (667.31) (0.42) (667.73) Segment Results 82.28 0.01 82.29 (87.57) (0.10) (87.67) Unallocated Corporate exp./Income 4.97 (4.20) Operating profit 77.32 (83.47) Interest Expense 15.02 (13.79 ) Exceptional Item - (-5.06) Income tax 16.48 (21.88) Profit from ordinary activities 45.82 (42.74) Extraordinary items -1.22 (44.72) Net Profit 44.60 (87.46)

Cosmo 36-60.p65 49 8/4/2010, 7:59 PM OTHER INFORMATIONS Segment assets 608.51 0.23 608.74 (599.50) (0.27) (599.77) Segment liabilities 53.05 - 53.05 (53.12) (-) (53.12) Capital expenditure 6.20 - 6.20 (153.43) (-) (153.43) Depreciation 28.92 - 28.92 (20.80) (-) (20.80) Non cash expenditure other than depreciation - - - (0.02) (-) (0.02) b) Secondary segment reporting is performed on the basis of location of all customers. All the business assets of the company are situated in India. In India Outside India Total (Rs. Crores) (Rs. Crores) (Rs. Crores) Sales Revenue 412.46 340.80 753.26 (344.21) (310.60) (654.81) Segment Assets 500.89 107.85 608.74 (529.89) (69.88) (599.77) Capital expenditure 6.20 - 6.20 (153.43) (-) (153.43) Note : Previous year figures are given in brackets. 14. The following amounts are to be credited to Investor education and protection fund as and when due

Current Year Previous Year Rs. Crores Rs. Crores i. Unpaid dividend 0.69 0.60 ii. Unpaid application money received for allotment of securities and due for refund - - iii. Unpaid matured deposits 0.01 0.01 iv. Unpaid matured debentures - - v. Interest accrued on above - - 15. Loans and advances in the nature of loans given to subsidiaries and associates etc:

Current Year Previous Year Rs. Crores Rs. Crores a) i) Loans given to subsidiary companies and outstanding at the year end - Cosmo Films, Inc. - 16.71 - CF Global Holdings Ltd.* - - ii) Maximum amount outstanding during the year - Cosmo Films, Inc. 16.71 16.71 - CF Global Holdings Ltd.* 73.34 - * free of interest b) i) Shares held by the loanee in the company outstanding at the year end - - ii) Maximum number of shares held during the year - -

Cosmo 36-60.p65 50 8/4/2010, 7:59 PM 16. The Company has circulated letters to all its suppliers requesting them to confirm whether they are covered under the Micro, Small and Medium Enterprises Development Act, 2006 ('MSMED'). Certain suppliers have provided the necessary confirmation alongwith the evidence of being Micro or small enterprises. However from the majority of the suppliers these confirmations are still awaited. On the basis of available information no principal or interest is payable at the year end to any supplier covered under MSMED. Further no interest was payable or paid during the year to any such supplier. 17. Extra ordinary item represents income tax paid for earlier years (previous year figure represents gain due to change in method of depreciation from written down value method to straight line method on plant and machinery of line IV,V and VI with retrospective effect). 18. Net foreign currency exposure that are not hedged by derivative instruments :

Currency Current Year Previous Year USD (2,24,23,049) (2,02,26,251) EURO (4,20,432) 7,20,407 GBP 5,34,901 11,66,504 CHF 9,555 - JPY 2,15,000 - Note : Figures in bracket signifies amount payable . 19. Directors Remuneration

Current Year Previous Year Rs. Crores Rs. Crores a) Remuneration Salary 0.29 0.29 Commission 2.96 3.08 Contribution to Provident & Superannuation Funds 0.05 0.05 Benefits - 0.01 b) Computation of net profits for the purpose of calculating Rs. Crores Managing Director's Commission : Profit before tax 62.30 Add : Director's fees 0.06 Director's remuneration 3.30 Loss on sale of fixed assets 0.26 Net profit in accordance with section 19(1)/349 65.92 Managing Director's Remuneration @5% 3.30 Salary & other benefits 0.34 Commission Payable 2.96

Cosmo 36-60.p65 51 8/4/2010, 7:59 PM 20. As required under Accounting Standard (AS-22), 'Accounting for taxes on income' issued by the Institute of Chartered Accountants of India, the company is required to account for deferred taxation while preparing its accounts. The details of deferred tax assets / liabilities are as under :

As at As at 31st March, 2010 31st March, 2009 Rs. Crores Rs. Crores Deferred Tax (liability) Fixed Assets (72.86) (70.93) (72.86) (70.93) Deferred Tax Assets Disallowances under section 43B 6.01 5.97 Provision for doubtful debts 0.07 - 6.08 5.97 Net deferred tax Assets / (Liability) (66.78) (64.96) 21. Related Party Disclosure (i) Names of related parties and description of relationship (a) Subsidiary & Step-down Subsidiary Companies - Cosmo Films, Inc., USA - CF Global Holdings Limited, Mauritius - CF (Netherlands) Holdings Limited B.V., Netherlands - Cosmo Films (Singapore) Pte. Limited, Singapore - Cosmo Films Hwa Seung Co. Limited, Korea (b) Associates - Cosmo Ferrites Limited (c) Key Managerial Personnel & their relatives - Sh. Ashok Jaipuria, Chairman & Managing Director (d) Enterprises over which Key Managerial Personnel have significant influence - Pravasi Enterprises Limited

Cosmo 36-60.p65 52 8/4/2010, 7:59 PM (ii) Transactions with related parties during the year

S. No. Particulars Subsidiary Associates Key Managerial Enterprises over & Stepdown Personnel & which key Subsidiary their relatives managerial Companies personnel have significant influence (Rs. Crores) (Rs. Crores) (Rs. Crores) (Rs. Crores) a) Remuneration paid - - 3.30 - (-) (-) (3.43) (-) b) Subscription received towards - - 0.54 2.78 equity share warrants forfeited (-) (-) (-) (-) c) Investment made 45.71 - - - (-) (-) (-) (-) d) Sales 89.55 - - - (60.59) (-) (-) (-) e) Loan given 73.34 - - - (16.71) (-) (-) (-) f) Interest earned 0.24 - - - (0.18) (-) (-) (-) g) Loan received back 90.05 - - - (-) (-) (-) (-) h) Fixed assets / spares purchased 0.25 - - - (0.27) (-) (-) (-) i) Investments sold 1.22 - - - (-) (-) (-) (-) j) Reimbursement of expenses received 14.09 - - - (-) (-) (-) (-) k) Reimbursement of expenses paid - - - 0.07 (-) (-) (-) (-) l) Commission paid 0.97 - - - (-) (-) (-) (-) m) Rent paid - - - 0.57 (-) (-) (-) (-) n) Security deposit / Advance rent paid - - - 0.62 (-) (-) (-) (-) o) Amount outstanding - Equity share warrants - - - - (-) (-) (0.54) (2.78) - Investments 45.71 5.55 - - (1.22) (5.55) (-) (-) - Sundry debtors 59.75 - - - (48.95) (-) (-) (-) - Against loan given - - - - (16.71) (-) (-) (-) - Sundry creditors 0.17 - - - (0.27) (-) (-) (-) - Other payables 0.97 - 2.96 - (-) (-) (3.08) (-) - Security deposit / advance rent given - - - 0.62 (-) (-) (-) (-)

Cosmo 36-60.p65 53 8/4/2010, 7:59 PM (iii) Other relevant information: b) State Plans (a) Related parties enlisted in (i) above are those Provident Fund is accrued on monthly basis in having transaction with the company. accordance with the terms of contract with the employees and is deposited with the "Statutory (b) The above excludes sitting fee of Rs. 0.06 Provident Fund". During the year Rs. 1.39 crores crores (Previous year Rs. 0.05 crores) paid to (previous year Rs.1.22 crores) has been paid as non-executive directors. contribution to the Statutory Provident Fund as (c) Previous year figures are given in brackets. employer's contribution which has been charged 22. Employee Benefit Obligations: to the profit & loss account. Besides, Employee State Insurance in respect of eligible employees is The various benefits provided to employees has been also being deposited with the statutory fund. During classified as under :- the year Rs. 0.03 crores (previous year Rs. 0.02 a) Defined Contribution Plans crores) have been paid to the fund as employer's contribution which has been charged to the profit & The company makes contribution towards loss account. superannuation to a defined contribution retirement benefits plan for qualifying employees. The c) Defined Benefit Plans (Funded) superannuation fund is administered by the The company makes contribution towards gratuity Trustees of Cosmo Films Limited Superannuation to a defined contribution retirement benefits plan Fund. The fund has taken policy with Life Insurance for qualifying employees. The gratuity fund is Corporation of India to provide for payment of administered by the Trustees of Cosmo Films retirement benefits to vested employees. During the Limited Gratuity Fund. The fund has taken policy year contribution paid to the superannuation fund with Life Insurance Corporation of India to provide Rs. 0.98 crores (previous year Rs. 0.88 crores) by for payment of retirement benefits to vested the company to cover fully the benefits to be paid employees. The present value of obligation is to the employees has been charged to the profit & determined based on actuarial valuation. loss account.

Cosmo 36-60.p65 54 8/4/2010, 7:59 PM As on As on 31.03.2010 31.03.2009 Rs. Crores Rs. Crores 1 Assumptions Discount Rate 8% 8% Salary Escalation 9% 7% 2 Table showing changes in present value of obligations Present value of obligations as at beginning of year 5.72 4.52 Interest cost 0.46 0.36 Current Service Cost 0.37 0.38 Benefits Paid (0.35) (0.32) Actuarial (gain)/Loss on obligations 1.38 0.78 Present value of obligations as at end of year 7.58 5.72 3. Table showing changes in the fair value of plan assets Fair value of plan assets at beginning of year 5.26 4.75 Expected return on plan assets 0.56 0.45 Contributions 1.82 0.38 Benefits Paid (0.35) (0.32) Actuarial Gain/(Loss) on Plan assets NIL NIL Fair value of plan assets at the end of year 7.29 5.26 4 Table showing fair value of plan assets Fair value of plan assets at beginning of year 5.26 4.75 Actual return on plan assets 0.56 0.45 Contributions 1.82 0.38 Benefits Paid (0.35) (0.32) Fair value of plan assets at the end of year 7.29 5.26 Funded status (0.29) (0.46) Excess of Actual over estimated return on plan assets NIL NIL (Actual rate of return = Estimated rate of return as ARD falls on 31st March) 5 Actuarial gain/ Loss recognized Actuarial gain/(Loss) for the year - Obligation (1.38) (0.78) Actuarial (gain)/Loss for the year - Plan assets NIL NIL Total (gain)/Loss for the year 1.38 0.78 Actuarial (gain)/Loss recognized in the year 1.38 0.78 6 The amounts to be recognized in the balance sheet and statements of Profit and Loss Present value of obligations as at the end of year 7.58 5.72 Fair value of plan assets as at the end of the year 7.29 5.26 Funded status (0.29) (0.46) Net Asset/(Liability) recognized in balance sheet 0.29 0.46 7 Expenses Recognized in statement of Profit & Loss Current Service cost 0.37 0.38 Interest Cost 0.46 0.36 Expected return on plan assets (0.56) (0.45) Net Actuarial (gain)/Loss recognized in the year 1.38 0.78 Expenses recognized in statement of Profit & Loss 1.65 1.08

Cosmo 36-60.p65 55 8/4/2010, 7:59 PM d) Defined Benefit Plans (Unfunded) the amount paid during the year Rs. 0.41 crores (previous year Rs. 0.24 crores) has been charged In respect of leave encashment the present value to the profit & loss account. of obligation is determined based on actuarial valuation by an independent actuary based on LIC 23. During the year 124 MT (Previous year nil) of raw 1994-96 (ultimate) mortality table. The actuarial material worth Rs. 3.33 crores (previous year nil) was valuation is based on terminal salary determined sold. Corresponding sale price of such material was by assuming an appropriate annual salary rise and Rs. 3.32 crores (Previous year nil). discounted by assuming an imputed rate of interest. 24. Information pursuant to the provision of Part II & Part The difference between the obligation at the IV of schedule VI of Companies Act, 1956 beginning of the year Rs. 1.49 crores (previous year Rs. 1.11 crores) and at the end of the year Rs. 1.90 crores (previous year Rs.1.49 crores) together with

A. Capacities & Production Current Year Previous year Qty. (MT) Qty. (MT) Class of goods Biaxially Oriented Polypropylene (BOPP) Film & Synthetic paper (including semi-finished & Waste) Licensed capacity N.A. N.A. Installed capacity (as certified by management) 116200 116200 Production 77262 64639 (includes internal consumption)

Qty. (Units) Qty. (Units) Thermal Lamination Machines Licenced capacity N.A. N.A. Installed capacity (as certified by management) N.A. N.A. Production - -

B. Purchase, Turnover & stock of goods Current Year Previous Year Class of goods Qty. Value Qty. Value MT Rs. Crores MT Rs. Crores Biaxially Oriented Polypropylene (BOPP) Film & Synthetic paper (including semifinished & Waste) Turnover 70516 782.78 56110 692.60 Opening Stock 2023 18.71 1505 11.70 Closing Stock 2335 20.71 2023 18.71 Qty. Value Qty. Value Units Rs. Crores Units Rs. Crores Thermal Lamination Machines Purchases 1 0.03 8 0.23 Turnover 2 0.08 11 0.42 Opening Stock 9 0.27 12 0.36 Closing Stock 8 0.23 9 0.27

Cosmo 36-60.p65 56 8/4/2010, 7:59 PM C. Consumption of Raw Materials Qty. Value Qty. Value MT Rs. Crores MT Rs. Crores Polypropylene/EVA 65309 437.15 54033 379.34 Others 32.39 27.32 469.54 406.66

D. Value of imported/indigenous Raw Material and Stores Percentage Value Percentage Value & Spares / Packing Material consumed Rs. Crores Rs. Crores Raw Material Imported 33.33 156.50 33.20 134.99 Indigenous 66.67 313.04 66.80 271.67 100.00 469.54 100.00 406.66 Stores, Spares and Packing Material Imported 15.66 5.59 14.46 4.01 Indigenous 84.34 30.09 85.54 23.72 100.00 35.68 100.00 27.73 E. Other additional information Current Year Previous Year Rs. Crores Rs. Crores C.I.F Value of Imports Raw Materials 134.46 113.93 Stores & Spares 6.20 3.13 Capital goods 0.20 95.71 Expenditure in Foreign Currency Travelling & Training 0.93 0.46 Services of foreign technicians 0.13 0.09 Sales Commission 2.04 1.54 Interest on Foreign currency loan 2.11 1.91 Others 3.11 4.45 Earnings in Foreign Exchange FOB value of exports 334.69 286.21 Remittance in Foreign Currency on Account of dividend to Non-Resident shareholders No of Shareholders 60 60 Shares held by them 19780 19860 Net amount of Dividend 0.01 0.01 Note : Does not include dividend paid in India to the mandatees of non-resident shareholders

Cosmo 36-60.p65 57 8/4/2010, 7:59 PM 25. Balance Sheet Abstract and Company’s General Business Profile

i. Registration Details Registration No / State Code 8355 / 55 Balance Sheet Date 31 03 2010 Date Month Year ii. Capital Raised during the year (Amount in Rs. Crores) Public Issue Right Issue NIL NIL Bonus Issue Private Placement NIL NIL

iii. Position of Mobilisation and Deployment of Funds (Amount in Rs. Crores) Total Liabilities Total Assets 623 . 42 623 . 42 Sources of Funds Paid-up Capital Reserves and Surplus* 19 . 44 339 . 03 *Including subscription to equity share warrants *Including deferred tax liability Secured Loans Unsecured Loans 252 . 99 11 . 96 Application of Funds Net Fixed Assets Investments 376 . 14 51 . 26 Net Current Assets Misc. Expenditure 196 . 02 NIL Accumulated Loss NIL iv. Performance of Company (Amount in Rs. Crores) Turnover and Other Income Total Expenditure 760 . 49 698 . 19 Profit/(Loss) Before Tax Profit/(Loss) After Current and Deferred Tax* 62 . 30 44 . 60 Basic / Diluted Earning per Share (Rs.)* Dividend (%) 22 . 94 50 * Including extraordinary items v. Generic Names of Three Principal Products/Services of Company (As per monetary terms) Item Code No. (ITC Code) 3920 . 99

Product Description BIAXIALLY ORIENTED POLYPROPYLENE F I LM & SYNTHET IC PAPER

Item Code No. (ITC Code) 8477 . 59 Product Description THERMAL LAMI NAT ION MACH I NE S Signature to Schedules 1 to 20 As per our report of even date annexed. FOR B.K. SHROFF & CO. Chartered Accountants O. P. Shroff Parvinder S Arora A. K. Jain H. K. Agrawal Ashok Jaipuria Partner Company Secretary Chief Financial Director Chairman & Officer Managing Director New Delhi DIN. 260592 DIN. 214707 28th May, 2010

Cosmo 36-60.p65 58 8/4/2010, 7:59 PM st – – 31 Rs. Crores Rs. st – – 31 Limited Chairman & Chairman DIN. 214707 Ashok Jaipuria Managing Director st – – NA NA (1.36) 31 st – – NA 31 Pte. Ltd.Pte. Ltd. Co. Kong) st – – Global Cosmo Cosmo Films Cosmo Cosmo NA 31 st Parvinder S Arora Parvinder – – Company SecretaryCompany NA 31 B.V. (6.50) 4.16 0.92 (0.98) (0.02) 1.10 st – – 31 U.A. Limited st – – NA NA 31 SUBSIDIARY COMPANIES SUBSIDIARY 76% 76.24% 76.24% 76.24% 76.24% 60.99% 76.24% 76.24% (Mauritius) Cosmo Films CF CF st – NA 100% Limited Limted Cooperatief, Holdings GK (Singapore) Seung (Hong Inc. Holidngs Holdings (Netherlands) (Netherlands) Holdings Films, Hwa Films Films, March’ 1010March’ March’ 10 March’ 10 March’ 10 March’ 10 March’ 10 March’ 10 March’ 10 CF Global CF subsidiary interest in the subsidiary -Holding % profit/loss so far subsidiary’s concernas they members of and not the holding company dealt with the holding company’s accounts. financial year subsidiary’s i)For previous subsidiary’s ii) For since it became financial years (0.06)subsidiary profit/loss so far subsidiary’s (0.02) concernas they members of the holding company and dealt with the holding company’s - accounts. financial year subsidiary’s i)For – ii) For subsidiary’s previous subsidiary’s ii) For since it became financial years May, 2010 May, STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT,1956 RELATING TO RELATING ACT,1956 THE COMPANIES SECTION 212 OF TO PURSUANT STATEMENT th S. No. S. Name of the Subsidiary 1 of Subsidiary2Year Financial Extent of holding company’s 3 31 amount of Net aggregate 4 amount of Net aggregate New Delhi New 28

Cosmo 36-60.p65 59 8/4/2010, 7:59 PM before after Dividend 0.00 (0.02) (0.02) 0.00 Hong Kong 0.00 (0.06) (0.06) 0.00 Mauritius 0.00 (0) (0) 0.00 0.00 (0.03) (0.03) 0.00 Mauritius 0.00 (38) (38) 0.00 0.00 (6) (6) 0.00 0.00 (0.00) (0.00) 0.00 Netherlands 0.00 (14) (14) 0.00 0.00 18,831 423 377 0.00 except in subsidiaries 2 0.00 38 0.00 14.77 0.00 101.83 1.35 0.70 0.00 Korea Liabiities 5,883 0.00 0.00 20,691 14,808 0.00 12,714 (1,762) (1,410) 0.00 March, 2010. st 50 377 4,748 4,321 500 (6) 9,493 8,999 0.00 7.24 5.460.16 36.09 1.21 23.39 15.28 13.90 0.00 0.00 44.11 9.36 60.60 5.46 1.36 0.00 1.21 Japan 0.00 Singapore 0.00 (0.02) 0.00 0.02 0.00 9.02 (0.35) 120.82 112.15 0.00 154.90 (7.52) 1.44 0.00 USA 2.26 (0.03) 42.83 40.60 0.00 0.00 (38) 0.00 42.86 (0.06) 42.81 0.01 0.00 11.97 6.91 33.64 6,700 (817) 6,700 (817) 2,000 (78) 26,778 24,856 0.00 34,331 (1,667) 319 0.00 9,500 (14) 9,488 40.49 (4.94) 35.55 0.00 0.00 150,000 113,287 748,057 484,770 0.00 914,432 194,003 113,287 0.00 3,000,000 1,731,281 8,434,272 3,702,991 0.00 25,527,592 339,570 175,297 0.00 st 0.4824 Indian investment on 31 32.1800 Rupee as in Rate agstof case Tax Tax March, 2010 March, Cr) 45.1200 Cr) 45.1200 Cr) 5.8000 Cr) 60.4300 40.49 (4.94) 125.03 89.48 0.00 76.83 (10.65) (8.52) 0.00 Netherlands (In Cr) 45.1200 (In Cr) 0.0399 S$ 000’s Currency exchange Assets Reporting Closing Capital Reserve Total Total Investments Turnover Profit Profit Proposed Country JPY’000’s HK$ 000’s USD 000’s USD 000’s USD 000’s INR (In Cr) INR INR (In Cr) 60.4300 INR (In INR INR (In INR (In INR (In Cr) KRW’000’s EURO 000’s EURO 000’s EURO FINANCIAL INFORMATION OF SUBSIDIARY COMPANIES OF SUBSIDIARY FINANCIAL INFORMATION Name of the Subsidiary CF (Mauritius) Holdings Limited Cosmo Films (Netherlands) Cooperatief,U.A CF (Netherlands) Holdings Limited B.V. INR (In CF Global Holdings GK Cosmo Films (Singapore) Pte Ltd. Ltd* Seung Co. Cosmo Films Hwa Ltd. Cosmo Films (Hong Kong) Inc.* Cosmo Films, * Turnover, Profit before tax, Profit after tax and proposed dividend are for 15 months period ended 31 tax, Profit after tax and proposed dividend are for Profit before Turnover, * CF Global Holdings Limited

Cosmo 36-60.p65 60 8/4/2010, 7:59 PM Auditors’ report on consolidated accounts

AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF COSMO FILMS LIMITED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF COSMO FILMS LIMITED, ITS SUBSIDIARY, STEP DOWN SUBSIDARIES AND ITS ASSOCIATE

We have examined the attached consolidated balance We report that the consolidated financial statements have sheet of Cosmo Films Limited, its subsidiary, step down been prepared by the company in accordance with the subsidiaries and its associate as at 31st March, 2010 and requirements of Accounting Standard (AS-21) Consolidated the Consolidated Profit and Loss Account and the Financial Statements and (AS-23) Accounting for consolidated cash flow statement for the year ended on Investments in Associates in Consolidated Financial that date. Statements, issued by the Institute of Chartered These financial statements are the responsibility of the Accountants of India and on the basis of the separate Cosmo Films Limited management. Our responsibility is to audited financial statements of Cosmo Films Limited, its express an opinion on these financial statements based subsidiaries, step down subsidiaries and its associate on our audit. We have conducted our audit in accordance included in the consolidated financial statements. with generally accepted auditing standards in India. These On the basis of the information and explanation given to us Standards require that we plan and perform the audit to and on the consideration of separate audit reports on obtain reasonable assurance that whether the financial statements are prepared, in all material respects, in individual audited financial statements of Cosmo Films accordance with an identified financial reporting framework Limited, its subsidiaries , step down subsidiaries and its and are free of material misstatements. An audit includes, associate, we are of the opinion that : examining on a test basis, evidence supporting the amounts (a) the Consolidated Balance Sheet gives a true and and disclosures in the financial statements. An audit also fair view of the consolidated state of affairs of includes assessing the accounting principles used and significant estimates made by management, as well as Cosmo Films Limited, its subsidiary, step down st evaluating the overall financial statements. We believe that subsidiaries and its associate as at 31 March, our audit provides a reasonable basis for our opinion. 2010;

We did not audit the financial statements of the subsidiary (b) the Consolidated Profit and Loss Account gives a namely CF Global Holdings Ltd and certain step down true and fair view of the consolidated results of subsidiaries whose financial statements reflects total assets operations of Cosmo Films Limited, its subsidiary, of Rs. 216.09 crores as on 31st March, 2010 and total step down subsidiaries and its associate for the year revenues of Rs. 252.86 crores for the year then ended. then ended; and These financial statements have been audited by other auditor whose report has been furnished to us, and in our (c) The consolidated cash flow statement gives a true opinion, in so far as it relates to the amounts included in and fair view of the consolidated cash flow of Cosmo respect of the said subsidiary, is based solely on the report Films Limited, its subsidiary, step down subsidiaries of the other auditor. We further report that the financial and its associate for the year then ended. statements of certain step down subsidiaries whose financial statements reflect total assets of Rs. 30.87 crores as on 31st March, 2010 and total revenues of Rs. 46.64 crores for the year then ended, have not been audited either For B.K.Shroff & Co. by us or by any other auditors and therefore, unaudited Chartered Accountants financial statements for the year ended 31st March, 2010 of Firm Registration No: 302166E these subsidiaries have been furnished to us by the management. There subsidiaries are not material to the O. P. Shroff consolidated financial statements either individually or in New Delhi Partner the aggregate. 28th May, 2010 Membership No: 6329

Cosmo 61-80.p65 61 8/4/2010, 7:59 PM COSMO FILMS LIMITED

Consolidated balance sheet as at 31st March, 2010

Schedule Current Year Previous Year Rs. Crores Rs. Crores SOURCES OF FUNDS SHAREHOLDERS’ FUND Share Capital 1 19.44 19.44 Reserves & Surplus 2 272.72 226.32 292.16 245.76 MINORITY INTEREST 8.97 - EQUITY SHARE WARRANTS - 3.32 (Refer note no. 7 on schedule 21) LOAN FUNDS Secured Loans 3 323.45 266.36 Unsecured Loans 4 32.94 0.01 356.39 266.37 DEFERRED TAX 70.62 63.03 728.14 578.48 APPLICATION OF FUNDS FIXED ASSETS 5 Gross Block 680.65 601.15 Less: Depreciation 243.45 185.91 Net Block 437.20 415.24 Add: Capital work in progress 1.90 0.75 439.10 415.99 INVESTMENTS 6 8.89 7.83 CURRENT ASSETS, LOANS AND ADVANCES Inventories 7 134.89 85.57 Sundry Debtors 8 146.76 51.72 Cash & Bank Balances 9 43.75 45.06 Loans & Advances 10 47.90 38.79 373.30 221.14 LESS: CURRENT LIABILITIES AND PROVISIONS Current Liabilities 11 79.92 52.68 Provisions 12 13.23 13.80 93.15 66.48 NET CURRENT ASSETS 280.15 154.66 MISCELLANEOUS EXPENDITURE 13 - - (To the extent not written off or adjusted) 728.14 578.48 NOTES ON CONSOLIDATED ACCOUNTS 19 SIGNIFICANT ACCOUNTING POLICIES 20 NOTES ON ACCOUNTS 21

Schedules 1 to 21 form an integral part of the accounts As per our report of even date annexed For B. K. SHROFF & CO. Chartered Accountants

O. P. Shroff Parvinder S Arora A. K. Jain H. K. Agrawal Ashok Jaipuria Partner Company Secretary Chief Financial Director Chairman & Officer Managing Director New Delhi DIN. 260592 DIN. 214707 28th May, 2010

Cosmo 61-80.p65 62 8/4/2010, 7:59 PM Consolidated profit & loss account for the year ended 31st March, 2010

Schedule Current Year Previous Year Rs. Crores Rs. Crores

INCOME Gross Sales 992.73 670.90 Less: Excise duty recovered 29.60 38.21 Net Sales 963.13 632.69 Other Incomes 14 15.32 5.13 Income from associates 1.06 (0.63) 979.51 637.19 EXPENDITURE Increase/(Decrease) in stocks 15 (37.88) (32.63) Purchases 27.68 0.23 Manufacturing and Other expenses 16 883.88 580.20 Depreciation 33.86 21.00 907.54 568.80 Profit before Interest, Exceptional item and Tax (EBIT) 71.97 68.39 Interest 17 18.28 14.00 Profit before Exceptional item and Tax 53.69 54.39 Exceptional item net of depreciation of Rs nil (previous year Rs. 0.14 crores) - (5.06) Profit before Tax (PBT) 53.69 49.33 Provision -Current Tax 19.17 11.47 -Fringe Benefit Tax - 0.45 -Deferred Tax (3.89) 8.03 Profit after Tax (PAT) 38.41 29.38 Extraordinary item net of tax Rs. 11.19 crores. (previous year Rs. 23.03 crores) 29.28 44.72 (Refer note no.12 on schedule 21) Profit after Tax including Extraordinary item 67.69 74.10 Minority Interest 4.21 - Profit after Tax including Extraordinary item and Minority Interest 63.48 74.10 APPROPRIATION Proposed Dividend on Equity Shares 9.72 9.72 Corporate Tax on Dividend 1.61 1.65 Transfer to General Reserve 52.15 62.73 63.48 74.10 Basic earning per share (Rs) -Excluding Extraordinary item 18(a) 21.32 15.11 -Including Extraordinary item 18(b) 32.65 38.12 Diluted earning per share (Rs) -Excluding Extraordinary item 18(a) 21.32 15.11 -Including Extraordinary item 18(b) 32.65 38.12 NOTES ON CONSOLIDATED ACCOUNTS 19 SIGNIFICANT ACCOUNTING POLICIES 20 NOTES ON ACCOUNTS 21

Schedules 1 to 21 form an integral part of the accounts As per our report of even date annexed For B. K. SHROFF & CO. Chartered Accountants

Cosmo 61-80.p65 63 8/4/2010, 7:59 PM Consolidated cash flow statement for the year ended 31st March, 2010

Schedule Current Year Previous Year Rs. Crores Rs. Crores A. Cash Flow from Operating Activities Profit before tax 53.69 49.33 Add : Adjustments for Depreciation 33.86 21.00 Miscellaneous Expenditure written off - 0.02 Interest 18.28 14.00 Change in foreign currency translation reserve (5.41) (0.56) (Profit)/Loss on sale of Fixed assets 0.08 0.41 Depreciation relating to exceptional item - (0.14) Operating Profit before Working Capital changes 100.50 84.06 Adjustments for change in Working Capital Trade & Other Receivables (107.89) 35.94 Inventories (49.32) (15.14) Trade & Other Payables 24.53 9.91 Cash generated from operations (32.18) 114.77 Direct Taxes paid (17.58) (13.29) Net Cash from Operating Activities (49.76) 101.48 B. Cash Flow from Investing Activities Purchase of Fixed Assets (57.47) (155.25) Sales of Fixed Assets 0.42 0.62 (Purchase)/Sale of Investments (2.54) 0.63 Net Cash from Investing Activities (59.59) (154.00) C. Cash Flow from Financing Activities Proceeds from Long Term Borrowings 61.79 108.23 Proceeds from Working Capital Borrowings 28.23 7.64 Change in Minority Interest 4.76 - Extraordinary item 42.91 - Interest paid (18.28) (14.00) Dividend paid (9.72) (9.72) Corporate tax on dividend (1.65) (1.88) Net Cash from Financing activities 108.04 90.27 Net increase in cash or cash equivalents (1.31) 37.75 Cash or cash equivalents (Opening balance) 45.06 7.31 Cash or cash equivalents (Closing balance) 43.75 45.06 NOTE : Figures in bracket represents cash outflow. NOTES ON CONSOLIDATED ACCOUNTS 19 SIGNIFICANT ACCOUNTING POLICIES 20 NOTES ON ACCOUNTS 21

Schedules 1 to 21 form an integral part of the accounts As per our report of even date annexed For B. K. SHROFF & CO. Chartered Accountants

Cosmo 61-80.p65 64 8/4/2010, 7:59 PM Schedules (forming part of the accounts)

Current Year Previous Year Rs. Crores Rs. Crores 1. SHARE CAPITAL Authorised 2,50,00,000 Equity shares of Rs.10 each 25.00 25.00 Issued, Subscribed and paid-up 1,94,40,076 Equity shares of Rs.10 each fully paid up 19.44 19.44 19.44 19.44 Of the above, a) 2,42,051 shares have been alloted to erstwhile shareholders of Gujarat Propack Limited on amalgamation. b) 84,86,705 shares have been alloted as fully paid bonus shares by capitalisation of capital reserve and share premium account.

Balance as Additions Deductions Balance as at 1.4.2009 at 31.03.2010 Rs. Crores Rs. Crores Rs. Crores Rs. Crores

2. RESERVES AND SURPLUS Capital Reserve 1.12 1.84 - 2.96 Share Premium Account 31.26 - - 31.26 Hedging Reserve - - 2.18 (2.18) Foreign Currency Translation Reserve (0.32) - 5.41 (5.73) General Reserve 194.26 52.15 - 246.41 226.32 53.99 7.59 272.72

Current Year Previous Year Rs. Crores Rs. Crores 3. SECURED LOANS A. From Financial Institutions Rupee Term Loans (a) - 2.87 B. From Banks Foreign Currency Loan (a) 42.03 56.87 Foreign Currency Loan (b) 52.97 64.25 Foreign Currency Loans (c) 69.20 - Notes Payable and Capital Lease (b) 1.27 1.62 Rupee Term Loans (a) 32.95 44.32 Cash Credit/Working Capital Demand Loans (d) 120.60 93.68 Cash Credit/Overdraft (e) 3.16 1.85 Vehicle Loan (f) 1.27 0.90 323.45 266.36

(a) Secured by first pari-passu charge over the entire fixed assets except assets exclusively charged. (b) Secured against hypothecation of machinery financed out of the loan amount. (c) Secured by first charge over the entire assets of respective subsidiaries.

Cosmo 61-80.p65 65 8/4/2010, 7:59 PM (d) Secured by hypothecation of raw materials, work in progress, stores and spares, finished goods, book debts and second charge on fixed assets secured to financial institutions except assets exclusively charged. (e) Secured against pledge of the fixed deposits. (f) Secured against hypothecation of vehicle financed out of the loan amount.

Note : Due within a year Rs. 30.88 crores (previous year Rs. 35.38 crores)

Current Year Previous Year Rs. Crores Rs. Crores 4. UNSECURED LOANS Fixed Deposits 0.01 0.01 Short term Loans and Advances From Banks (*Rs. 13209) 10.00 * From Others 1.95 - Other Loans and Advances From Others 20.98 - 32.94 0.01

Note : Due within a year Rs. 0.01 crores (previous year Rs. 0.01 crores)

Cosmo 61-80.p65 66 8/4/2010, 8:00 PM 415.24 ) on account of 1.90 0.75 depreciation and ansferred. NET BLOCK 439.10 415.99 terms of agreement . d during the year. ital expenditure. t. - 11.15 0.63 Total at As at As - -- 0.07 0.06 1.13 1.52 1.14 1.54 0.84 1.42 4.95 4.67 68.35 185.91 Adjustments*** - DEPRECIATION - 47 2.76 (2.68) 15.91 63.11 43.74 0.060.04 0.01 0.02 Rs. 0.37 crores) on account of advance against capital expenditure 0.37 crores) on account of advance Rs. - 79.02 10. - 1.58 - 1.20 - 11.15 1.48 601.15 233.26 21.00 0.03 3.57 1.39 0.20 (0.69) 2.28 1.29 0.87 1.41 6.37 1.61 0.65 0.05 15.66 7.68 0.76 (2.42) 10.86 4.80 5.94 - - GROSS BLOCK GROSS at Additions Sales/ Total Upto For the 1.58 1.20 0.63 10.52 2.26 1.34 6.28 1.50 54.21 24.81 As 13.62 2.09 601.15436.75 95.37 165.88 15.87 680.65 185.91 33.86 (23.68) 243.45 437.20 01.04.2009 Adjustments 31.03.2009 year 31.03.2010 31.03.2009 Rs. CroresRs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Crores Rs. Rs. nil. (previous year Rs. 0.14 crores) on exchange rate difference of liability for acquisition of assets. of liability for rate difference 0.14 crores) on exchange Rs. year (previous nil. Rs. to sell. to be tr the amount includes cost of shares said society which are yet Besides, to be registered. Deed is yet Conveyance exchange difference (net). difference exchange (c) 0.93 crores includes Rs. addition in gross block year 13.51 crores (previous includes Rs. Sales / adjustments in gross block (b) Includes cost of 5 shares of Rs. 50 each of Pluto Apartment Co-operative Housing Society Ltd. paid as part 50 each of Pluto Apartment of cost fla Housing Society Ltd. Co-operative (b) Includes cost of 5 shares Rs. (b) change in method of 67.75 crores) on account of retrospective Rs. year (previous Adjustment in depreciation includes Rs.nil - Leasehold Land- Freehold year Previous Capital work in progress **** Land & Buildings Buildings * Plant & Machinery **Furniture, Fixture & 521.37 25376) Fittings (*Rs. 55.11 14.38 562.10 164.66 29.46 (18.73) 212.85 349.25 356.71 Factory & Office Factory Equipment Vehicles * (a) in has been taken Possession Housing Society. cost of residential space in a Co-operative 0.64 crores towards Includes Rs. 5. FIXED ASSETS Particulars **** year nil (previous Capital-work-in includes Rs. progress *** (a) subsidiary assets of step down acquire Adjustment in depreciation includes accumulated with respect to fixed ** (a) cap 0.24 crores) earned for on funds received Rs. year nil (previous from banks Rs. Additions are net of interest received

Cosmo 61-80.p65 67 8/4/2010, 8:00 PM No of shares/Units Face Current Previous Value Year Year Current Previous Rs. Crores Rs. Crores Year Year 6. INVESTMENTS Long Term Investments in Equity shares (Quoted-Non Trade) In associate at original cost 55,48,475 55,48,475 Rs.10 6.66 6.66 (including capital reserve Rs. 1.11 crores, previous year Rs. 1.11 crores) Add: Income from associate 2.23 1.17 8.89 7.83 Aggregate market value of quoted investments 6.77 2.96

Note : Non-disposal undertaking has been given to the financial institutions in respect of shares held in associate.

Current Year Previous Year Rs. Crores Rs. Crores 7. INVENTORIES (As taken, valued and certified by the management) Raw material (including material in transit Rs. 6.69 crores, previous year nil) 32.66 23.91 Stores & spares (including material in transit Rs. 0.72 crores, 17.98 15.30 previous year nil) Finished goods (including material in transit Rs. 3.01 crores, previous year Rs. 7.33 crores) 82.81 46.13 Stock-in-Process 1.44 0.23 134.89 85.57

8. SUNDRY DEBTORS (Unsecured) Exceeding six months Considered good 3.84 0.38 Considered doubtful 16.67 - 20.51 0.38 Less : Provision for doubtful debts 16.67 - 3.84 0.38 Others Considered good 142.92 51.34 Considered doubtful 0.85 - 143.77 51.34 Less : Provision for doubtful debts 0.85 - 142.92 51.34 146.76 51.72

Cosmo 61-80.p65 68 8/4/2010, 8:00 PM Current Year Previous Year Rs. Crores Rs. Crores 9. CASH & BANK BALANCES Cash, Cheques & Stamps in hand 2.06 0.02 Balances with Scheduled Banks In Current / Cash Credit Account 5.39 17.21 In Fixed Deposit/Margin Money Account * 16.71 27.83 Balances with Unscheduled Banks In Current / Cash Credit Account 19.59 -

43.75 45.06 * Includes Rs. 11.68 crores (previous year Rs. 12.68 crores) held with a bank in India out of ECB borrowings for capital expenditure .

10. LOANS & ADVANCES (Unsecured -considered good unless otherwise stated) Advances (recoverable in cash or in kind or for value to be received) * 42.17 28.89 Balances with Central Excise/Customs authorities 3.88 5.65 Security Deposits 1.69 0.35 Tax deducted at Source / Advance Tax (net of provision of Rs. 14.66 crores, previous year Rs. 11.81 crores) 0.16 3.90 47.90 38.79 * Includes (i) amount due from directors & officers nil (previous year nil) (ii) maximum amount due at any time nil (previous year nil)

11. CURRENT LIABILITIES Sundry Creditors * 28.71 19.18 Other Liabilities ** 49.28 31.76 Trade Deposits 0.05 0.07 Interest accrued but not due on loans 1.88 1.67 79.92 52.68 *dues of micro enterprises and small enterprises (refer note no 16 on schedule 21) ** (i) amount to be credited to investor education and protection fund (refer note no. 15 on schedule 21) (ii) includes mark to market loss on interest rate swap contract of Rs. 2.18 crores (previous year nil) (refer note no. 9 on schedule 21)

12. PROVISIONS For proposed dividend 9.72 9.72 For corporate tax on dividend 1.61 1.65 For gratuity - 0.94 For leave encashments 1.90 1.49 13.23 13.80

Cosmo 61-80.p65 69 8/4/2010, 8:00 PM Current Year Previous Year Rs. Crores Rs. Crores 13. MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) SHARE/DEBENTURE ISSUE EXPENSES As per last Balance Sheet - 0.02 Less: Written off during the year - 0.02 --

PRELIMINARY EXPENSES As per last Balance Sheet (*Rs. 22958) - * Less: Written off during the year (*Rs. 22958) - * -- --

14. OTHER INCOMES Interest on deposits with banks 0.84 0.70 Interest received on loans and deposits 0.10 0.05 Royalty Income 2.30 - Insurance & other claims 0.32 0.16 Miscellaneous receipts 2.21 2.14 Bad debts recovered 0.04 - Exchange rate fluctuation (net) 5.69 - Excess Provisions / Liabilities no longer required written back 3.82 2.08 15.32 5.13

15. INCREASE/(DECREASE) IN STOCKS Closing stocks Finished goods 82.81 46.13 Stock in process 1.43 0.23 84.24 46.36 Opening stocks Finished goods 46.13 12.06 Stock in process 0.23 1.67 46.36 13.73 Increase/(Decrease) in Stocks 37.88 32.63

Cosmo 61-80.p65 70 8/4/2010, 8:00 PM Current Year Previous Year Rs. Crores Rs. Crores 16. MANUFACTURING AND OTHER EXPENSES Raw Materials consumed 598.09 406.66 Stores, Spares & Packing material 39.62 27.73 Power, Water & Fuel 57.79 47.72 Other Manufacturing expenses 0.63 0.54 Excise duty 4.10 5.81 Salaries, Wages, Bonus & Other benefits 75.40 36.52 Gratuity 1.26 1.35 Contribution to Provident/ Superannuation Funds, Employees State Insurance etc. 9.86 2.28 Staff Welfare expenses 1.14 0.66 Training & Recruitment expenses 0.71 0.47 Rent 5.30 1.63 Rates & Taxes 0.41 0.17 Insurance 1.44 0.85 Printing & Stationary 1.11 0.25 Bank & financial charges 2.97 4.07 Travelling & Conveyance 7.91 3.31 Vehicle Running & Maintenance 2.24 1.33 Communication expenses 2.24 1.00 Repairs & Maintenance Plant & Machinery 5.56 2.93 Building 1.40 0.37 Others 2.10 9.06 1.50 4.80 Legal & professional charges 8.59 3.51 Directors’ Fees 0.06 0.05 Charity & Donations 0.21 0.10 Miscellaneous expenses 1.77 1.05 Auditors’ Remuneration As Audit fees 0.11 0.11 As Quarterly Audit fees 0.10 0.10 As Tax Audit fees 0.02 0.02 In Other capacity 0.01 0.01 Out of pocket expenses 0.01 0.25 0.01 0.25 Freight & Forwarding 43.14 24.43 Selling Commission 3.46 2.43 Other Selling expenses 2.71 1.32 Bad Debts/advances provided written off 0.20 - Provision for Bad debts 0.21 0.93 Claims paid/written off (*Rs. 10861) 0.06 * Sales Tax payments 2.16 2.77 Exchange rate fluctuation (net) - 0.82 Loss on fixed assets sold/discarded (net) 0.08 0.41 Miscellaneous expenditure written off - 0.02 884.18 585.24 Less: Pre-operative expenditure capitalized 0.30 5.04 883.88 580.20

Cosmo 61-80.p65 71 8/4/2010, 8:00 PM Current Year Previous Year Rs. Crores Rs. Crores 17. INTEREST On Term Loans 10.25 7.62 To Banks & others 8.03 9.67 18.28 17.29 Less: Pre-operative expenditure capitalized - 3.29 18.28 14.00

18. BASIC & DILUTED EARNING PER SHARE (a) Excluding Extraordinary item Profit after tax excluduing extraordinary item and minority interest* 41.45 29.38 Number of equity shares outstanding during the year 19,440,076 19,440,076 Basic & Diluted earning per share (Rs.) 21.32 15.11

(b) Including Extraordinary item Profit after tax including extraordinary item and minority interest 63.48 74.10 Number of equity shares outstanding during the year 19,440,076 19,440,076 Basic & Diluted earning per share (Rs.) 32.65 38.12

Note : Issue price of equity share warrants is more than its fair value and employee stock option scheme is yet to be framed. There is no dilution. * Minority interest of Rs. (-) 3.04 crores in net profit from ordinary activity after tax of respective subsidiaries is considered.

Cosmo 61-80.p65 72 8/4/2010, 8:00 PM 19. NOTES ON CONSOLIDATED ACCOUNTS Subsidiary/Step Country of Holding down subsidiary Incorporation %age A. SUBSIDIARIES CF Global Holdings Mauritius 100%* Limited (CGH) (i) The accounts have been prepared to comply with all CF (Mauritius) Holdings Mauritius 76%** material aspects applicable to accounting policies of Limited (CMH) Cosmo Films Limited. Goodwill arising on investments Cosmo Films (Netherlands) Netherlands 100%*** made in subsidiary /step down subsidiary companies has Cooperatief U.A. (CNC) been treated as intangible asset/ set off against capital CF (Netherlands) Holdings Netherlands 100%**** reserve and capital reserve arising on investment made Ltd. B.V. (CNBV) in subsidiary / step down subsidiary companies has been Cosmo Films, Inc. (CFI) USA 100%***** treated as Reserve & Surplus. CF Global Holdings Japan 100%***** (ii) The consolidated accounts have been prepared based GK (CGHG) on a line by line consolidation of the Profit and Loss Cosmo Films (Singapore) Singapore 100%***** account and Balance Sheet of Cosmo Films Limited and Pte. Ltd. (CFS) its subsidiary/step down subsidiary companies. For the Cosmo Films Hwa Seung Korea 100%***** purpose of consolidation, adjustments have been made Company Ltd. (CHS) in respect of intra-group transactions. Cosmo Films (Hong Kong) Hong Kong 100%***** Ltd. (CFH) (iii) For the purpose of consolidation, adjustments have been *Held by the Company made in respect of shareholdings in subsidiary/step down **Held by CGH subsidiary companies and amounts owned from / to *** Held by CMH (99%) and by CGH (1%) Company within the Group. **** Held by CNC ***** Held by CNBV (iv) The Subsidiary/step down subsidiary companies which B. ASSOCIATES have been considered for purposes of consolidated results are given below. The assets and liabilities have (i) Investment in an associate has been accounted for under been converted at the rate prevailing as on 31st March, the equity method from the date on which the investee fall within the definition of an associate. On acquisition, 2010, income and expenses items have been converted as the case may be, the difference between the cost of at average rates and the resultant exchange difference acquisition and the share of Cosmo Films Limited in the has been accumulated in foreign currency translation equity of the associate has been described as goodwill reserve account. or capital reserves and included in the carrying amount of the investment in the associate. The carrying amount of investments is adjusted thereafter for the post acquisition change in the investor share of net assets of the investee. (ii) The details of investments in associates made by Cosmo Films Limited are as given below- Rs. Crores Associate Main County of Ownership Original cost Amount of Accumulated Carrying Company Activities Incorporation Interest & of investment capital reserve/ profit/(-) loss amount of Voting Power (-) goodwill at the year end investment at included in the year end original cost Cosmo Ferrites Electronic India 46.12% 5.55 1.11 2.23 8.89 Limited (46.12%) (5.55) (1.11) (1.17) (7.83)

Note: Previous year figure are in brackets. (iii) The Company's share of the contingencies and capital commitments of the associate i.e. Cosmo Ferrites Limited for which the company is also contingently liable is Rs. 0.38 crores (Previous year Rs. 0.46 crores).

Cosmo 61-80.p65 73 8/4/2010, 8:00 PM 20. SIGNIFICANT ACCOUNTING POLICIES Foreign currency current assets and liabilities are converted into rupee at the exchange rate prevailing on a. METHOD OF ACCOUNTING the balance sheet date and the resultant gains/losses The accounts are prepared under the historical cost are reflected in the profit and loss account. convention using the accrual method of accounting unless Wherever forward contracts have been taken the otherwise stated hereafter. Accounting policies not exchange conversion is made at the contracted rate. specifically referred to are consistent with generally Gains/losses arising out of cancellation of forward accepted accounting principles. contracts are treated as a revenue item. b. FIXED ASSETS h. EXCISE & OTHER DUTIES Fixed assets are stated at cost of acquisition, inclusive Excise duty in respect of finished goods lying in factory of inward freight, duties & taxes and incidental expenses premises and custom duty on imported goods lying in related to acquisition and are net of CENVAT credit. In custom bonded warehouse are provided and included respect of major projects involving construction, related in the valuation of inventory. CENVAT benefit is preoperational expenses form part of the value of the accounted for by reducing the purchase cost of the assets capitalized. materials/fixed assets. Import duty benefits on exports made are accounted for as export incentives. These c. INVESTMENTS accounting treatments have no impact on the profit/loss Long-term investments are stated at cost of acquisition. for the year. Provision for diminution in the value of long-term i. EMPLOYEES investment is made only if; such a decline is other than temporary in the opinion of the management. Employer’s contribution to defined contribution plans and state plans are charged to revenue every year. Liability d. INVENTORIES of obligation under defined benefit plans is determined Inventories are valued at lower of cost or net realizable on the basis of an actuarial valuation at the end of the value after providing for cost of obsolescence and other year. Actuarial gains and losses comprises of experience anticipated losses wherever considered necessary. Cost adjustments and the effects of changes in actuarial is determined on weighted average basis. Finished goods assumptions and are recognized immediately in the profit include cost of conversion and other costs incurred in and loss account as income or expense. bringing the inventories to their present location and Liability towards additional payment in respect of salary, condition. wages and bonus, if any, is debited to Profit & Loss e. DEPRECIATION Account in the year in which the agreement is finalized with employees. Depreciation is calculated on leased and other fixed assets on straight-line method over estimated useful life j. TAXATION of the assets. Leasehold land is also being depreciated Provision for Income Tax is based on assessable profits over the lease period. determined as per prevailing taxation laws. In respect of land and building, where no separate k. DEFERRED TAXATION valuation is available, depreciation has been provided Deferred taxation is provided using the liability method in on the total value of land and building. respect of the taxation effect arising from all material f. RESEARCH AND DEVELOPMENT timing differences between the accounting and tax treatment of income and expenditure which are expected Revenue expenditure on research and development is with reasonable probability to crystallize in foreseeable charged against the profit of the year in which it is future. incurred. Capital expenditure on research and development is shown as an addition to fixed assets. Deferred tax benefits are recognized in the financial statements only to the extent of any deferred tax liability g. FOREIGN CURRENCY TRANSACTIONS or when such benefits are reasonably expected to be Foreign currency loans availed for acquisition of fixed realizable in the near future. assets are converted at the rate prevailing on the due l. MISCELLANEOUS EXPENDITURE date for installments repayable during the year and at the rate prevailing on the date of balance sheet for the Share/debenture issue expenses and preliminary outstanding loan. The fluctuation is adjusted in the original expenses are being proportionately written off over a cost of fixed assets. period of ten years.

Cosmo 61-80.p65 74 8/4/2010, 8:00 PM m. INCOME FROM SALES 21. NOTES ON ACCOUNTS Exports are accounted for on the basis of the date of bill of lading/airways bill. Domestic sales are accounted for Current Year Previous Year Rs. crores Rs. crores on dispatch from factory/warehouse. 1. Estimated amount of contracts 11.70 0.12 Sales are inclusive of export incentives/ benefits and are (net of advances) remaining to net of rebates and discounts. be executed on capital account and not provided for n. INCOME FROM INVESTMENTS/DEPOSITS 2. Contingent Liabilities not provided for in respect of Income from investments is credited to revenue in the a) Bank guarantees (including 4.31 5.23 year in which it accrues. Income is stated in full with the deferred guarantees) tax thereon being accounted for under advance tax. b) Disputed demands for Income tax, 15.32 6.55 Sales Tax, Excise duty, etc. o. CLAIMS AND BENEFITS c) Claims against the company not 1.54 - Claims receivable and export benefits are accounted on acknowledged as debts accrual basis to the extent considered receivable. 3. Rs. 5.57 crores (previous year Rs. 7.86 crores) realized on p. BORROWING COSTS discounting of letter of credits have been reduced from debtors in these accounts. Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying asset 4. Letter of credit for Rs. 19.57 crores (Previous year Rs. 18.97 are capitalized as part of the cost of that asset. Other crores) have been opened for which the material has not been borrowing costs are recognized as an expense in the shipped as on the date of the Balance sheet. period in which they are incurred. Capitalization of borrowing costs ceases when substantially all the 5. Figures for previous year have been regrouped / rearranged activities necessary to prepare the qualifying assets for wherever considered necessary. its intended use are complete. 6. In respect of capital goods imported under EPCG Scheme, q. EARNING PER SHARE bonds of Rs. 224.52 crores have been executed in favour of the President of India for import at a concessional rate of Basic earning per share is calculated by dividing the net custom duty. There is an obligation to export products for profit for the year attributable to equity shareholders by Rs. 737.43 crores (FOB) within a period of eight years from the weighted average number of equity shares the date of issue of license ie 16.09.2008 for import of capital outstanding during the year. goods. Goods worth Rs.122.84 crores (FOB) have been Diluted earning per share is calculated by dividing the exported till 31.03.2010. net profit attributable to equity shareholders by the 7. In terms of the approval of the shareholders of the parent weighted average number of equity shares outstanding company and as per the applicable statutory provisions, the during the year (adjusted for the effects of dilutive options) parent company on 4th February, 2008, has issued and allotted r. IMPAIRMENT OF ASSETS 3100000 warrants convertible into same number of equity shares of Rs. 10 each at a price of Rs. 107 (including a Impairment loss is provided to the extent the carrying premium of Rs. 97) per warrant on preferential basis to the amount of assets exceeds their recoverable amount. persons belonging to promoter group of the parent company. Recoverable amount is the higher of an asset’s net selling The warrant holders have paid Rs. 10.70 per warrant. The price and its value in use. Value in use is the present warrant holders have a right to apply for equity shares of the value of estimated further cash flows expected to arise parent company at any time within 18 months from the date from the continuing use of an asset and from its disposal of allotment of warrants. Due to non exercise of option within at the end of its useful life. the stipulated time, the parent company has cancelled the warrants and forfeited the amount of advance paid on warrants s. CONTINGENT LIABILITIES and credited the amount to Capital Reserve account in Un-provided contingent liabilities are disclosed in the accordance with the generally accepted accounting principles. accounts by way of notes giving nature and quantum of 8. The parent company in its extra-ordinary general meeting such liabilities. held on 11th January, 2008 resolved to issue and allot equity

Cosmo 61-80.p65 75 8/4/2010, 8:00 PM shares not exceeding 1000000 in number under ‘Employee expenses) of Rs. 30.50 crores net of taxes of Rs. 12.41 Stock Option Scheme’ at such price and at such time as may crores has been shown as an Extraordinary item. be decided by the board. No equity shares have been issued (b) Tax of Rs. 1.22 crores relating to earlier years. or allotted. Previous year figures of extra-ordinary items represents 9. The parent company has entered into interest rate swap gain due to change in method of depreciation from written contract (floating rate to fixed rate) to hedge its risk associated down value method to straight line method on plant and with LIBOR fluctuations. In accordance with Accounting machinery of line IV, V and VI with retrospective effect. Standard 30, “Financial Instruments – recognition and measurement” the mark to market loss as on 31st March, 2010 13. A step down subsidiary has been named as one of the is estimated at Rs. 2.18 crores on such instruments which defending party in a legal case involving a claim of Euro 6.48 qualify as effective hedges. million with respect to an agreement which was terminated by ACCO Brands Corporation of USA before the closing of 10. The parent company has claimed/will claim 100% Deferral/ GBC acquisition transaction. The parent company has filed a Exemption benefits under sales tax for the financial years legal suit against ACCO Brand Corporation of USA seeking from 1996-97 to 2009-10 on the basis of decision of the certain reliefs against any adverse judgment in the matter. Hon’ble First Bench of the Maharashtra Sales Tax Tribunal at Mumbai in case of M/s Pee Vee Textile Ltd. and VIP 14. Segments have been identified in accordance with Accounting Industries Ltd. The said benefits have not been allowed for Standard on Segment Reporting (AS-17) taking into account the financial years 1996-97 to 2004-05 for which appeal has the organization structure as well as differential risks and been filed (for financial year 2004-05 appeal is to be filed ) returns of these segments. and for the financial years 2005-06 to 2008-09 VAT audit a) Business segment has been disclosed as the primary report has been filed and for the financial year 2009-10 segment. The consolidated company is organized into quarterly returns have been filed. Demands of Rs.12.77 two business Segments namely Packaging Films and crores (previous year Rs. 0.07 crores ) have been received Others. in respect of financial year for which assessment has been completed against which provision of Rs.10.12 crores Rs. Crores (previous year Rs.10.12 crores) is available in these PARTICULARS Packaging Others Total accounts. Besides, provision of Rs. 4.42 crores (previous Films year Rs. 3.63 crores) is available in respect of financial years for which assessment is to be completed. Sales Revenue 948.09 15.04 963.13 (632.27) (0.42) (632.69) Based upon legal opinion received and Hon’ble Maharashtra Other Income 15.32 - 15.32 Sales Tax Tribunal Mumbai judgments for financial years (5.13) (-) (5.13) 1996-97,1997-98 and 2001-02 setting aside the order of the first appellate authority and remanding the matter back to the Total 963.41 15.04 978.45 first appellate authority to decide afresh the matter following (637.40) (0.42) (637.82) Mumbai High court judgement in the case of M/s Pee Vee Segment Results 77.23 -0.45 76.78 Textiles Ltd., the parent company is hopeful that the matter (74.04) (0.10) (74.14) will be decided in its favour. Consequent upon favourable Unallocated Corporate exp./ income 4.81 judgment, the parent company will be entitled to an income (5.75) of Rs. 20.84 crores (including amount paid and charged to Operating Profit 71.97 profit & loss account) which has not been considered in these (68.39) accounts. Interest Exp. 18.28 11. In pursuance of Accounting Standard on Impairment on (14.00) Assets (AS-28) issued by Institute of Chartered Accountants Exceptional item - of India certain assets / cash generating units have been (-5.06) identified and impaired. There is no further impairment / reversal during the year. Income tax 15.28 (19.95) 12. Extraordinary item comprises of Profit from ordinary activities 38.41 (a) On 11th June, 2009 the parent company has through a (29.38) step down subsidiary acquired GBC Commercial Print Extra ordinary item 29.28 Finishing Business from ACCO Brand Corporation of (44.72) USA. The gain (i.e. excess of fair market value of the Net profit 67.69 acquired assets and liabilities over the aggregate of (74.10) purchase price, acquisition cost and restructuring

Cosmo 61-80.p65 76 8/4/2010, 8:00 PM OTHER INFORMATIONS Rs. Crores information no principal or interest is payable at the year end to any supplier covered under MSMED. Further no interest PARTICULARS Packaging Others Total was payable or paid during the year to any such supplier. Films Segment Assets 750.69 17.80 768.49 17. Net foreign currency exposure that are not hedged by (587.90) (0.27) (588.17) derivative instruments : (Figures in 000) Segment Liabilities 79.94 0.00 79.94 (53.44) (0.00) (53.44) Currency Current Year Previous Year Capital expenditure 57.47 0.00 57.47 USD (28,582) (28,178) (155.25) (0.00) (155.25) EURO (420) 720 Depreciation 33.86 0.00 33.86 GBP 837 1,167 (21.00) (0.00) (21.00) CHF 10 - JPY 399 - Non-cash expenditure - - - HKD 33 - other than dep. (0.02) (0.00) (0.02) CAD 915 - b) Secondary segment reporting is performed on the basis of Note : Figures in bracket signifies amount payable . location of all customers and business assets. Rs. Crores 18. Directors Remuneration PARTICULARS India Outside Total Current Year Previous Year India Rs. crores Rs. crores Sales revenue 412.46 550.67 963.13 a) Remuneration (344.21) (288.48) (632.69) Salary 1.19 1.21 Commission 2.96 3.08 Segment assets 500.89 267.60 768.49 Contribution to Provident & 0.05 0.05 (529.89) (58.28) (588.17) Superannuation Funds Capital expenditure 6.20 51.27 57.47 Benefits - 0.01 (153.43) (1.82) (155.25) Note : Previous year figures are given in bracket. 19. As required under Accounting standard (AS-22), ‘Accounting for taxes on income’ issued by the Institute of Chartered Accountants of India , the company is required to account for 15. The following amounts are to be credited to Investor education deferred taxation while preparing its accounts. The details of and protection fund as and when due deferred tax assets / liabilities are as under : Current Year Previous Year Rs. crores Rs. crores Particulars As at As At 31st March, 2010 31st March, 2009 i. Unpaid dividend 0.69 0.60 Rs. Crores Rs. Crores ii. Unpaid application money - - Deferred Tax(Liability) received for allotment of Fixed assets (80.58) (71.06) securities and due for refund Acquisition Gain (6.93) - iii. Unpaid matured deposits 0.01 0.01 (87.51) (71.06) iv. Unpaid matured debentures - - Deferred Tax Assets v. Interest accrued on above - - Disallowance U/s 43 B 6.01 5.97 Provision for Doubtful Debt 0.60 - 16. Letters have been circulated to all its suppliers requesting Loss carried forward 8.61 2.06 them to confirm whether they are covered under the Micro, Acquisition Gain - - Small and Medium Enterprises Development Act, 2006 Others 1.67 - (‘MSMED’). Certain suppliers have provided the necessary 16.89 8.03 confirmation alongwith the evidence of being Micro or small enterprises. However from the majority of the suppliers these Net Deferred Tax Assets/(Liability) (70.62) (63.03) confirmations are still awaited. On the basis of available

Cosmo 61-80.p65 77 8/4/2010, 8:00 PM 20. Related Party Disclosure 21. Employee Benefit Obligations: (i) Names of related parties and description of relationship The various benefits provided to employees has been (a) Key Managerial personnel & their relatives classified as under:- - Sh. Ashok Jaipuria, Chairman & Managing Director a) Defined Contribution Plans - Sh. David Terhune Contribution are made towards superannuation to a defined contribution retirement benefits plan for qualifying (b) Enterprises over which key managerial personnel employees. The superannuation fund is administered by have significant influence their Trustees. The fund has taken policy with Life - Pravasi Enterprises Limited Insurance Corporation of India to provide for payment of retirement benefits to vested employees. During the year (ii) Transactions with related parties during the year contribution paid to the superannuation fund Rs. 0.98 crores (previous year Rs. 0.88 crores) to cover fully the S. Particulars Key Managerial Enterprises over benefits to be paid to the employees has been charged No. Personnel & their which key to the profit & loss account. relatives managerial personnel have b) State Plans significant influence Provident Fund is accrued on monthly basis in (Rs. crores) (Rs. crores) accordance with the terms of contract with the employees a) Remuneration paid 4.20 - and is deposited with the “Statutory Provident Fund”. (4.35) (-) During the year Rs. 1.39 crores (previous year Rs. 1.22 b) Subscription received crores ) has been paid as contribution to the Statutory towards equity share Provident Fund as employer’s contribution which has warrants forfeited 0.54 2.78 been charged to the profit & loss account. Besides, (-) (-) Employee State Insurance in respect of eligible c) Rent paid - 0.57 employees is also being deposited with the statutory fund. (-) (-) During the year Rs. 0.03 crores (previous year Rs. 0.02 d) Security deposit/Advance - 0.62 crores) have been paid to the fund as employer’s rent paid (-) (-) contribution which has been charged to the profit & loss account. e) Amount outstanding - Equity share warrants - - c) Defined Benefit Plans (Funded) (0.54) (2.78) (i) The parent company makes contribution towards - Security deposit / - 0.62 gratuity to a defined contribution retirement benefits advance rent given (-) (-) plan for qualifying employees. The gratuity fund is administered by their Trustees. The fund has taken Note : Previous year figures are given in bracket. policy with Life Insurance Corporation of India to (iii) Other relevant information: - provide for payment of retirement benefits to vested employees. (a) Related parties enlisted in (i) above are those having transactions. (ii) One of the step down subsidiary makes contribution towards pension to a defined pension benefit plan (b) The above excludes sitting fee of Rs. 0.06 crores for qualifying employees in Netherlands. The said (Previous year Rs 0.05 crores) paid to non-executive subsidiary has taken a policy with Swiss Life directors. Netherlands to provide for payment of pension (c) Previous year figures are given in brackets. benefits to qualifying employees.

Cosmo 61-80.p65 78 8/4/2010, 8:00 PM The present value of obligation is determined based on actuarial valuation.

Gratuity Pension As on As on As on As on 31.03.2010 31.03.2009 31.03.2010 31.03.2009 Rs. Crores Rs. Crores Rs. Crores Rs. Crores 1 Assumptions Discount Rate 8% 8% 5.75% * Salary Escalation 9% 7% 5.00% * 2 Table showing changes in present value of obligations Present value of obligations as at beginning of year 5.72 4.52 NIL * Interest cost 0.46 0.36 0.53 * Current Service Cost 0.37 0.38 1.50 * Benefits Paid (0.35) (0.32) NIL * Actuarial (gain)/Loss on obligations 1.38 0.78 NIL * Present value of obligations as at end of year 7.58 5.72 2.03 * 3 Table showing changes in the fair value of plan assets Fair value of plan assets at beginning of year 5.26 4.75 NIL * Expected return on plan assets 0.56 0.45 0.04 * Contributions 1.82 0.38 1.59 * Benefits Paid (0.35) (0.32) NIL * Actuarial Gain/(Loss) on Plan assets NIL NIL NIL * Fair value of plan assets at the end of year 7.29 5.26 1.63 * 4 Table showing fair value of plan assets Fair value of plan assets at beginning of year 5.26 4.75 NIL * Actual return on plan assets 0.56 0.45 0.04 * Contributions 1.82 0.38 1.59 * Benefits Paid (0.35) (0.32) NIL * Fair value of plan assets at the end of year 7.29 5.26 1.63 * Funded status (0.29) (0.46) (0.40) * Excess of Actual over estimated return on plan assets NIL NIL NIL * (Actual rate of return = Estimated rate of return as ARD falls on 31st March) 5 Actuarial gain/ Loss recognized Actuarial gain/(Loss) for the year – Obligation (1.38) (0.78) NIL * Actuarial (gain)/Loss for the year – Plan assets NIL NIL NIL * Total (gain)/Loss for the year 1.38 0.78 NIL * Actuarial (gain)/Loss recognized in the year 1.38 0.78 NIL * 6 The amounts to be recognized in the balance sheet and statements of Profit and loss Present value of obligations as at the end of year 7.58 5.72 2.03 * Fair value of plan assets as at the end of the year 7.29 5.26 1.63 * Funded status (0.29) (0.46) (0.40) * Net Asset/(Liability) recognized in balance sheet 0.29 0.46 0.40 * 7 Expenses Recognized in statement of Profit & Loss Current Service cost 0.37 0.38 1.50 * Interest Cost 0.46 0.36 0.53 * Expected return on plan assets (0.56) (0.45) (0.04) * Net Actuarial (gain)/Loss recognized in the year 1.38 0.78 NIL * Expenses recognized in statement of Profit & Loss 1.65 1.08 1.99 * * Not Applicable

Cosmo 61-80.p65 79 8/4/2010, 8:00 PM d) Defined Benefit Plans (Unfunded) imputed rate of interest. The difference between the obligation at the beginning of the year Rs. 1.49 crores In respect of leave encashment the present value of (previous year Rs. 1.11 crores) and at the end of the year obligation is determined based on actuarial valuation by Rs. 1.90 crores (previous year Rs.1.49 crores) together an independent actuary based on LIC 1994-96 (ultimate) with the amount paid during the year Rs. 0.41 crores mortality table. The actuarial valuation is based on (previous year Rs. 0.24 crores) has been charged to the terminal salary determined by assuming an appropriate profit & loss account. annual salary rise and discounted by assuming an

Signature to Scheudles 1 to 21 As per our report of even date annexed For B. K. SHROFF & CO. Chartered Accountants

Cosmo 61-80.p65 80 8/4/2010, 8:00 PM