Ind000031333 2006 A 00 L 00 00

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ANNUAL REPORT
2005-2006
IFB INDUSTRIES LIMITED

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IFII
IFB INDUSTRIES LTD.
BOARD OF DIRECTORS REGISTERED OFFICE

Executive Chairman 14, Taratolla Road
Mr. Bijon Nag Kolkata - 700 088
Tel: (091) (33) 2401 4917 - 23
Directors Fax : (091) (33) 2401 4182, 2401 4579
Mr. B. P. Muktieh (Nominee of 1DBI) E-mail: ifbi_legal@ifbglobal.com
Mr. Sornen Bal
Dr. Rathindra Nath Mitra
Mr. Radharaman Bhattacharya
Mr. R. Muralidhar
Mr. K. M. Unnikrishnan CORPORATE OFFICE
Plot No. IND-5, Sector -1
East Kolkata Township
Kolkata - 700 107
AUDIT COMMITTEE Tel: (091) (33) 2442 8286/87/89/90/91
Chairman Fax .- (091) (33) 2442 7779/1003
Mr. B. P. Muktieh E-mail: ifbi_legal@ifbglobal.com
Members
Mr. Somen Bal
Mr. Radharaman Bhattacharya
Mr. R. Muralidhar
CONTENTS
COMPANY SECRETARY
Mr. G. Ray Chowdhury Notice 3-4
Directors' Report, 5-11
Corporate Governance Report 12 - 18
AUDITORS Ten Years' Highlights 19
Deloitte Haskins & Sells Auditors' Report 20 - 23

Chartered Accountants
Balance Sheet 24
Profit & Loss Account 25
Cash Flow Statement 26
REGISTRAR AND Schedules to Balance Sheet and

SHARE TRANSFER AGENTS
Profit & Loss Account 27 - 42
CB Management Services (P) Ltd.
P 22, Bondel Road, Kolkata - 700 019 Balance Sheet Abstract : 43
IF11
IFB INDUSTRIES LTD.
Regd. Office : 14, Taratolla Road
Kolkata - 700 088
NOTICE
NOTICE is hereby given that the 30th Annual General Meeting of the members of IFB Industries Limited will be held at Eastern
Zonal Cultural Center, IA - 290, Sector III, Bidhannagar, Calcutta - 700 091 on 30th August, 2006 at 11.00 a.m to transact the
following:
ORDINARY BUSINESS
1. To receive, consider and adopt the Audited Balance Sheet and Profit & Loss Account for the financial year ended 31st
March, 2006 and reports of the Directors and Auditors thereon.
2. To appoint a Director in place of Mr. R. Muralidhar who retires by rotation and being eligible offers himself for
reappointment.
3. To appoint a Director in place of Mr. K. M. Unnikrishnan who retires by rotation and being eligible offers himself for
reappointment.
4. To consider and if thought fit, to pass, with or without modification the following resolution as a special resolution :
"RESOLVED THAT M/s. Deloitte Raskins & Sells, Chartered Accountants be and are hereby appointed Auditors of the
Company from the conclusion of this Annual General Meeting upto the conclusion of the next Annual General Meeting
and the Board of Directors be and is hereby authorised to fix their remuneration and out of pocket expenses payable to
them."
Registered. Office : By Order of the Board

14, Taratolla Road
Kolkata - 700 088 Goutam Ray Chowdhury
Dated : 30th June, 2006 Company Secretary
NOTES:
i) A member entitled to attend and vote at the meeting is entitled to appoint a proxy, to attend and vote on a poll on his behalf
and such a proxy need not be a member of the Company. Proxies in order to be effective must be deposited at the Registered
Office or with the Registrars and Share Transfer Agent of the Company, M/s CB Management Services (P) Ltd., not less
than 48 hours before the meeting.
ii) The Register of Members of the Company and the Share Transfer Registers shall remain closed from 28th August, 2006 to
30th August, 2006 (both days inclusive).
iii) The members are requested to
a) notify immediately any change in their address to the Company;

b) bring their copy of the Annual Report to the meeting;
c) write to the Company's Registrars & Share Transfer Agents, M/s CB Management Services (P) Ltd enclosing their
share certificates for consolidation into one folio for better investor service, if they have more than one folio in
identical order of name(s).
iv) Members who holds shares indematerialized form are requested to write their client ID and DP ID Nos. and those who
hold shares in physical form are requested to write their Folio No. in the attendance slip for attending the meeting to
facilitate identification of membership at the meeting. <
v) Explanatory Statements under Section 173(2) of the Companies Act, 1956 for resolution nos. 4 is given hereunder.
vi) Additional information, pursuant to clause 49 of the Listing Agreement with Stock Exchanges, on Directors recomm
ended by the Board of Directors for re-appointment at the Annual General Meeting is appearing in the Report and
Accounts.
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.
Resolution No. 4
As the Company is a widely held Company and its shares are traded on the Stock Exchanges regularly, a part of its share capital
is sometimes held by the financial institutions who now routinely invest in the stock market. As this may sometime attract the
provisions of Section 224A of the Companies Act, 1956, the Company proposes to appoint the Auditors by Special Resolution as
abundant precaution.
The Board recommends the passing of this Special Resolution.
None of the Directors is interested/concerned in the resolution.
Registered. Office : By Order of the Board

14, Taratolla Road
Kolkata - 700 088 Goutam Ray Chowdhury
Dated: 30th June, 2006 • Company Secretary
IF1S
IFB INDUSTRIES LTD.
DIRECTORS' REPORT to the Shareholders

Dear Shareholders, and sales in washing machines and dryers were
Your Directors present the 30th Annual Report and Accounts recorded, the sale of microwave oven had increased
for the Financial Year ended 31st March, 2006. substantially. During the year the new economy model
washing machine "DIVA" and high end model
1. FINANCIAL RESULTS: DIGITAL 7 kg were launched. However, the margin in
(Rs. '000) w&hing machine sale reduced due to rawmaterial
Year ended Year ended price increase and increased sale of economy segment
31st March, 31st March, washing machines. Due to financial constraints the
2006 2005 Company could not make adequate advertisement and
Total Income 2652387 2405070 marketing expenses leading to lower sales in higher
end washing machines.
Expenditure 2890843 3229824
Due to growth in the automobile sector the Company
Loss before Extra-ordinary items
is
could improve the business of fine blanking segment as
and prior Period adjustments (238456) (824754)
compared to last year. Despite an overall 15% growth
Prior period items (772) (5434) in the automobile sector there has been a severe price
war among the competitors leading to a lower margin
Gain on interest waiver 108076 486201
on fine blanking components supplied by the company
Net Loss (131152) (343987) to its customers. The Company has already ventured in
Provn for FBI (6836) - other areas and has become regular vendor to customers
like BSNL, Defence Factories, etc.
Balance Brought forward ( 5327299) (4983312)
During the year, the Company has suffered a loss of
Balance carried to
Rs. 13.11 crores as against previous year's reported
Balance Sheet (5465287) (5327299)
figure of Rs. 34.4 crores. Loss for the year under review
reduced due to substantial reduction in interest cost
and booking of gain on interest waiver consequent to
2. DIVIDEND:
debt settlement.
In view of the Company having made losses for the
above period the Board regrets its inability to
MANAGEMENT DISCUSSION AND ANALYSIS:
recommend any dividend for the year.
A) Industry Structure,& Developments :
The year 2005-06 shows encouraging results for
3. REVIEW OF OPERATION:
all segments of automobile industry and it is
The positive impact of strategies initiated during the
expected to grow if the favourable conditions
last coupleof years alongwith revival of Indian economy
prevail. Exports have also been showing the
has helped the Home Appliances and Engineering
buoyancy. The exports will be potential source of
Divisions to achieve growth in sales. Market penetration,
revenue growth in the future. Due to increase in
increased focus on manufacturing efficiency and
the price of steel ,plastic and other input materials
productivity supported by signs of industrial revival
all the washing machine manufacturers are facing
played a key role in the growth. Further, the product
the heat and the industry pricing has been coming
range was extended in home appliance and engineering
down. Demand growth has been slow because of
business.
low penetration of washing machines in India.
Despite the fact that the washing machine segment has Being an appliance that has substitute, the utility
under performed compared to the other durable perception of the product is low and washing
segments mainly due to its declining position in the machine rank low in thepriority list of consumers.
consumers' list of aspirations, the Company maintained The product is still to find acceptance in the rural
strong presence and leadership in the fully automatic market where a majority of the population resides,
front loading segment. While a growth in production as a result demand remains restricted to the bigger
towns and cities. With the increasing urbanization C) Segment wise performance.:
and marginal price difference between front Though Fine Blanking Division has improved its
loading fully automatic (lower end) and top turnover but operating profit as compared to last
loading automatic washing machine, front loading year reduced due to increase in material cost,
fully automatic washing machines are being freight and other overhead cost. The Home
preferred by a larger section of consumer. The low Appliance division has achieved better result
growth in demand vis-a-vis, the large idle compared to previous year by increasing its
capacities and price led competition are the key turnover and adopting various cost control
reasons for the industry's weak financial measures but a lot more need to be done in the
performance.- areas of cost control and the Company is
aggressively pursuing the same. All our product
B) Opportunities & Threats : categories have performed above industry
The Indian GDP continues to grow at a robust rate average. To give more focus for Micro wave ovens,
of 7 to 8 percent. The economic growth presents dishwasher and dryers independent managers
several attractive opportunities. The greatest have been given the responsibility of these product
opportunity of the Company is its brand equity, categories.
product quality, latest technical know how and
last but not the least is the trust in Company's D) Outlook:
products by the valued customers. The Company The pick up in the global economy, the revival of
has built up brand image through close liaison the Indian economy, industrial revival and reforms
with its valued customers during the past years of programmes being implemented at various stages
its operation. The two main threats are: are factors that augur well for the Company.
H Significant rise in material cost will drastically Efforts towards higher operational efficiencies
impact on contribution unless operating cost and focus on cost reduction shall continue. In
can be reduced at unprecedented magnitude addition to increasing market penetration and
and speed. higher volumes the Company is also expanding
its product range.
D The growth of the Indian economy together
with the reduction of import duties makes Modest demand growth of washing machines in
India increasingly a target market for many the region of 3-5% over the medium term is
MNCs and therefore, competitive pressure on expected to be driven by increasing urbanization,
the domestic market will continue to grow the risingpopulation of working woman, declining
fast. In particular, imports from low labour price and soft rates on consumers credit and higher
cost countries will increase and will lead to disposable income increasing the affordability of
increased price pressure. Over the last couple the product.
of years the MNCs have eaten up the share of A significant share of demand for fully automatic
other brand owners and consolidating their washing machines accrues from the replacement
presence in the market. Today consumers are segment. Replacement market to be aggressively
increasingly looking for products that not only targeted.
offer varied features but also competively
priced. The tardy growth in demand has Our product in every category are significantly
adversely affected capacity utilization of better than competitors. We strongly believe that
industry. Idle capacity have been high at 60- these products require education and demon-
75% as many players had set up large capacities stration. We have come up with large scale
in anticipation of high demand growth. demonstration for our home appliances. We don't
want to discount our brand and we want to charge
IFB's well crafted business strategies have enabled for the high quality and performance that we are
it to retain its lead market share and has been delivering to our customers. We want to improve
successful in improving its operating efficiencies our distribution network, reduce our inventories
consistently. and realize our old outstandings /claims.
IF1I
IFB INDUSTRIES LTD.
We want to establish IFB as a specialist in Company has not received any adverse comments
appliances rather than a generalist. we wish to go from them on the adequacy of internal control
beyond our existing product range. We have to system.
look at air-conditioning and other opportunities
in future. We are also looking for top loader G) Human Resources:
washing machine and filling all our portfolio gaps IFB is a knowledge-driven organization and its
and driving sales very aggressively. greatest asset is the experience and skills of its
employees. Recognizing that the workforce will
The Indian auto-ancillaries sector is poised for
provide the critical competitive edge in its growth
growth. Companies which have made their mark,
endeavor, IFB has laid major emphasis on
now wait to scale up to meet global orders. IFB has
acquiring, maintaining and developing its human
also given proper thrust to explore the possibility
asset base.
of acquiring export orders.
As a result of focused attention the employees at
E) Concerns: all levels have actively participated in the effort to
Market stress on product pricing vis-a-vis impact sustain and improve the performance of the
of record high prices of aluminium, copper, brass, Company even in the most difficult times. The
steel etc on input cost and weakening of rupee to Company had 686 nos. employees at the end of
Euro & USD is a major area of concern. Dumping March 2006. As in the past, industrial relations
of goods from China and Korea is a major concern continued to remain cordial at all locations in the
for Home Appliance Division. Availability of Company.
quality manpower has been an area of concern
due to increasing job opportunities all around. H) Risk Management:
Appropriate measures have already been taken IFB seeks to make risk management frame work
through value engineering and alternate sourcing simplistic to facilitate a quick identification of
• for restricting input cost to current level. We have potential risk events/risks and actual risks, its
upgraded our norms of quality to meet new communication and thereafter escalation of the
challenges. Small groups are energized for risk events identified to the appropriate persons
addressing product and process quality issues. to enable a timely and satisfactory risk response to
Life cycle and reliability testing lab is now fully be initiated. Response to risk and potential risk
operational for evaluating performance of events are to be within the guidelines set for
appliances and critical components. Stringent tests response. The risk strategy is determined by the
related to extreme conditions of environment, Board and given shape and communicated by the
transportation, power, water, etc. are carried out risk committee at operation level annually or more
both in-house as well as external labs. Activities of often as required. Risk compliance will address
vendor development are strengthened for the need to comply with regulation as well as with
continuously evaluating vendorperformance and internal policies, procedures and guidelines.
capability to deliver quality components. Certain designated business support units will
bear the responsibility of ensuring regulatory
F) Internal Control Systems and their adequacy : compliances by the Corporation.
The Company has adequate system of internal
controls and checks and balances to ensure that its On a periodic basis, risks due to external and
assets are safeguarded and protected against loss internal factors are assessed by responsible
from unauthorized use. The strength of these managers across the organization. These risks are
systems is continuously being monitored by the reported through operations review and
internal auditors and the findings of these audits disclosures in meetings. Internal controls are
are reported to the Audit Committee of the Board exercised through policies, processes and systems
and also to the Board of Directors. The adequacy that have been established to ensure timely
of the internal control system has also been availability of information and facilitate proactive
examined by the statutory auditors and the risk management within the respective areas of
operations. We have also insured ourselves against STATUS OF REFERENCE TO THE BOARD FOR
various types of business risks . A few key risk INDUSTRIAL AND FINANCIAL RESTRU-
areas and mitigation measures are given below - CTURING (BIFR):
In terms of order of Hon'ble BIFR, IDBI Ltd., the
Area
Operating Agency (OA), appointed M /s Tata Economic
Retail marketing - With the entry of large format
consultancy Services (TECS) to carry out techno
retail stores in India the retail market is likely to
economic viability study of the Company, who after
undergo a change and dealer driven market of
studying different operating units of the Company
today may be replaced by the retail chains in the
submitted its report.
years to come.
The Company prepared its draft rehabilitation scheme
Mitigation measures
( DRS) in line with the recommendations of TECS, its
We have formulated our strategy to market our
paying capacity and the settlement already entered
products to the retail chains and shall act
into with different secured creditors and submitted the
accordingly.
same to O.A with a copy to all secured creditors and
Manpower Hon'ble BIFR. A joint meeting of secufed creditors was
Recruitment and retention of professional organized by the O.A to take the views of secured
manpower in today's competitive environment is lenders on the DRS submitted by the Company to
the biggest challenge being faced by us. enable OA to submit its report with DRS. Though most
of the secured creditors intimated their acceptance of
Mitigation measures
the compromise amounts offered by the Company, it
With a view to retaining manpower, performance
was not agreed by a few secured creditors. It was finally
incentive plan has been worked out besides
agreed that OA should forward fully-tied up scheme to
ensuring etc correction in line with Companies of
Hon'ble Bench on finalization of compromise settlement
our size.
with all lenders which is likely to resolved shortly.
Range of products
Our limited range of products against the wide DIRECTORS' RESPONSIBILITY STATEMENT IN
range of competition brands put us at a TERMS OF SECTION 217 (2AA) OF THE
disadvantage with dealers. COMPANIES ACT, 1956:
Mitigation measures To the best of the knowledge and belief and according
We have increased our ground level activities to the confirmations and explanations obtained by
and are opting for more direct to customer them, your directors make the following statements in
activities to increase our product reach. terms of Section 217(2AA) of the Companies Act, 1956:
Introduction of other products such as toploaders, a) In the preparation of the annual accounts, the
airconditioners etc. is being planned for financial applicable accounting standards have been
year 2006-2007. followed along with proper explanation relating
to material departures;
CAUTIONARY STATEMENT b) The Directors have selected such accounting
Statement in this Management discussion and Analysis policies and applied them consistently and made
describing the Company's objectives, projection, estimates judgments and estimates that are reasonable and
and expectations are 'forward looking statement' within the prudent so as to give a true and fair view of the
meaning of applicable laws and regulations. Actual state of affairs of the Company at the end of the
results might differ substantially or materially from those financial year and of the loss of the Company for
expressed or implied. Important developments that could that period;
affect the company's operations include market competition,
c) The Directors have taken proper and sufficient
significant change in political & economic environment in
care for the maintenance of adequate accounting
India, tax law, exchange rate fluctuation, interest and other
records in accordance with the provisions of the
cost.
Companies Act, 1956 for safeguarding the assets
IFH
IFB INDUSTRIES LTD.
of the Company and for preventing and detecting 11. TRANSFER TO INVESTORS EDUCATION AND
fraud and other irregularities; PROTECTION FUND:
In terms of section 205A & 205C of the Companies Act
d) These accounts are prepared on a going concern
an amount aggregating to Rs 174599 .lying with the
basis.
Company as unclaimed for a period of seven years on
account of public deposits was transferred during the
7. CORPORATE GOVERNANCE: year to the Investors Education and Protection Fund.
As stipulated by Clause 49 of the Listing Agreement, a
Report on Corporate Governance along with a
12. DELISTING FROM DELHI STOCK EXCHANGE :
Certificate from the Auditors is given separately in this
The application for delis ting to Delhi Stock Exchange is
Annual Report.
pending.
8. SUBSIDIARY:
13 PREFERENTIAL ALLOTMENT:
As the net worth of European Fine Blanking Ltd. (EFB)
During the year the Company allotted 13500000 equity
an overseas subsidiary of the Company was
shares to IFB Automotive Pvt. Ltd. on preferential
substantially eroded by March 2003 and EFB was not in
basis and the shares have been listed with NSE and
a position to pay its creditors, all the assets of the
BSE. The proceeds of the issued shares have been
Company was taken possession of by the
utilized towards payment to the secured creditors of
Administrative Receivers appointed by the bankers of
the Company. The promoters participated in the above
EFB and were sold in satisfaction of debts. Finally the
issue to bring fund in line with DRS submitted to
Company was dissolved on 19th July 2005.
Operating Agency.
9. DEBENTURES: During the year the Company also allotted 5%
The Company has already cleared all its liabilities to Cumulative Redeemable Preference Shares (CRPS) for
debentures issued to public. During the year the Rs 1600 lakhs at a face value of Rs 10/- per share to IDBI
Company restructured its debenture debts with Life Ltd. as part of the loan settlement.
Insurance Corporation of India and paying regularly
in terms of the Memorandum of Settlement entered 14. AUDITORS:
into with privately placed debenture holders. During M/s Deloitte Haskins & Sells, Chartered Accountants,
the year the Company has cleared its dues to The Army retire at the conclusion of the ensuing Annual General
Group Insurance Fund. During the current month the Meeting. They have signified their willingness to accept
Company has clear its dues to UTI Asset Management reappointment and have further confirmed their
Company Pvt. Ltd. by one time settlement in respect of eligibility under section 224(1 B) of the Companies
18% NCDs. The Company is also negotiating and Act, 1956.
hopeful to settle its balance debenture debt outstanding
to UTI. The Auditors' observations in their report dated
30th June, 2006 are dealt with suitably in the notes on
10. SETTLEMENT OF SECURED LOANS: accounts in Schedule 15 as annexed to the Balance Sheet
With limited resources the Company continued its and Profit & Loss Account which are self explanatory..
endeavor to approach various secured creditors
including Banks and Financial Institutions for one time 15. DIRECTORS :
settlement of outstandingduesandhasbeensuccessful The non-redemption of debentures attracted directors
to settle with most of its secured lenders. During the disqualification in terms of section 274(l)(g) of the
year under review the Company accepted the settlement Companies Act. A writ petition was filed before the
proposal of IDBI Ltd and also entered into Hon'ble High Court challenging the applicability of
Memorandum of Settlement with State Bank of India section 274(l)(g) of the Companies Act which is pending
and are paying regularly the installments as per the for final disposal. An interim order dated 14.05.2004
settlement schedule. has been passed by the Hon'ble Calcutta High Court
directing Union of India and its authorized agents, 17. ENVIRONMENT, CONSERVATION OF ENERGY,
servants or otherwise from giving any effect or further TECHNOLOGY ABSORPTION, FOREIGN
effect to or taking any step inpursuance of the provisions EXCHANGE EARNINGS AND OUTGO:
contained in section 274(1 )(g) of the Companies Act, As required by the Companies (Disclosure of Particulars
1956. Mr. R. Muralidhar and & Mr. K.M.Unnikrishnan in the Report of the Board of Directors) Rules, 1988, the
retire as directors by rotation at the ensuing Annual relevant data are given in the Annexure to this Report.
General Meeting and being eligible, offer themselves
for reappointment. The particulars of directors seeking 18. ACKNOWLEDGMENTS:
appointment / reappointment are given in Corporate Your Directors would like to place on record their
Governance section of this Report. sincere appreciation to the Shareholders,
Debentureholders and also Financial Institutions,
16. PERSONNEL: Banks, Customers, Central & State Government Offices
The Directors would like to place on record their and all others for their co-operation and support.
appreciation of the dedication and hard work put in by
employees at all levels.
The Company did not have any employee falling within
the scope of Section 217 (2A) of the Companies Act, On behalf of the Board
1956 read with the Companies (Particulars of Place : Kolkata BIJON NAG
Employees) Rules, 1975. Dated : 30th June 2006 ' Chairman
10
IFB
IFB INDUSTRIES LTD.
ANNEXURE TO DIRECTORS REPORT OF IFB INDUSTRIES LTD.

INFORMATION AS PER SECTION 217(1)(E) READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE
REPORT OF THE BOARD OF DIRECTORS) RULES, 1988.
A. CONSERVATION OF ENERGY
The Company's operations involve low energy consumption. However, the Company took adequate measures to
optimise use of energy through improved operational methods.
B. TECHNOLOGY ABSORPTION
The Company is a leader in its respective product category and this has become possible due to absorption of technology
in the quickest possible time and development of in house Research & Development. Further, development activities were
carried out to make the products more suitable for Indian conditions, e.g. quality of water, fluctuating power supply and
environmental pollution.
The Company's R&D activity focuses mainly on application of new materials, new process, latest electronic system and
metal processing technology. The unit could also indigenise critical electronic components, e.g. speed control unit,
switches, thermostats, magnetic valves, etc. in shortest possible time. The Company is now actively involved in upgrading
computer design software, wash lab equipment, development of new models, etc.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year under review, the Company earned foreign exchange equivalent to Rs. 11873 thousand. Details of Foreign
exchange outgo on account of imports, expenditure on travelling, knowhow, royalties etc and Export earnings are shown
in note no. 16 under the heading 'OTHER INFORMATION' forming part of the Balance Sheet and Profit & Loss Account.
11
REPORT ON CORPORATE GOVERNANCE

(Pursuant to Clause 49 of the Listing Agreement)
Company's Philosophy on Corporate Governance

The Company is committed to good Corporate Governance. The Company fully realises the rights of its shareholders to
information on the performance of the Company and considers itself a trustee of its shareholders. The Company is of the view
that good Corporate Governance is an optimum mix of regulatory compliances as well as voluntary disclosures and practices.
The Company is focused on attaining the highest levels of transparency, fairness, accountability and integrity in its dealings with
all the constituents of its business i.e. the stakeholders. Towards this end, substantial disclosure on the Board of Directors and its
Committees, financial and stock performance has been made in this Annual Report.
Board of Directors
At present the Board comprises seven directors — out of which four are non-Executive and Independent Directors including the
nominee of IDBI. Two are none Executive Directors and one Executive Director. Composition of the Board and the category of
the Directors as well as details of their directorships in other companies/committees are given below:
Director Category Number of other Membership of

Directorships Board Committees
Mr. Bijon Nag Executive Chirman 4 -

Mr. Somen Bal Non-Executive Director 3 3
Mr. B. P. Muktieh Independent & IDBI 3 1
Nominee
Mr. Radharaman Bhattacharya Independent Director - 2
Dr. Rathindra Nath Mitra Independent Director :- 1
Mr. R. Muralidhar Independent Director - 1
Mr. K. M. Unnikrishnan Non-Executive Director - 2
Attendance of Directors at Board Meetings and Annual General Meeting:

The Board of Directors met four times during the last financial year, on the following dates — 30.05.2005,30.06.2005, 30.07.2005
31.10.2005 and 31.01.2006.
The attendance at the Board Meetings and Annual General Meeting during the year were as follows:
Name of Directors Attendance
Board Meeting Annual General Meeting
Mr. Bijon Nag 5 Present
Mr. B. P. Muktieh 1 Present
Mr. Somen Bal 5 Present
Dr. Rathindra Nath Mitra 5 Present
Mr. Radharaman Bhattacharya 5 Present
Mr. R. Muralidhar 1 Absent
Mr. K.M. Unnikrishnan 4 Present
12
IF1I
IFB INDUSTRIES LTD.
Remuneration of Directors:
Remuneration Committee
Remuneration committee consists of three non executive Directors. Dr. Rathindra Nath Mitra, Mr. Somen Bal and Mr. K. M.
Unnikrishnan are the members of the committee. No meeting was held during 2005-06.
Remuneration to Non-Executive Directors
The Non-Executive Directors are paid sitting fees of Rs. 1000/- for every meeting of Board, Remuneration and Committees.
However no sitting fee is paid to the members of committee of directors for attending share transfer / investors grievance
committee. The details of the remuneration paid to the Non-Executive Directors for the year 2005-06 are given below.
Remuneration of Executive Chairman
The remuneration of the Executive Chairman is reviewed and recommended by the remuneration committee to the Board and
approved by shareholders in General Meeting. The Company does not have stock option plan for its Directors or employees. The
contract with Mr. Bijon Nag is for five years which has been approved by the Board on 30th January, 2002 and by shareholders
in AGM on August 2002. Contract may be determined by a notice period of six months on either side.
Details of Remuneration paid to Directors for the year ended 31st March, 2006 are as follows :
Directors Sitting Fees * Salary & Perquisites Com. Total

Mr. Bijon Nag - ** 2040329 - , 2040329
Mr. B. P. Muktieh 2000 - - 2000
Mr. Somen Bal 11000 - - 11000
Dr. Rathindra Nath Mitra 5000 - - 5000
Mr. Radharaman Bhattacharya 9000 - - 9000
Mr. R. Muralidhar 1000 - - 1000
Mr. K.M. Unnikrishnan 7000 - - 7000
* Includes fees for Committee Meetings.

** Includes Rs. 302, 723 towards contribution to provident, superanuation and gratuity funds.
Mr. Somen Bal and Mr. Radharaman Bhattacharya, Non-Executive Directors holding 1600 and 1000 nos equity shares of the
Company as on 31st March, 2006. No other Non-Executive Director is holding any share of the Company.
Audit Committee:
The Audit Committee comprises three independent directors and one non-executive director at present. The Terms of Reference
of this Committee cover the matters specified for Audit Committees under Clause 49 of the Listing Agreement as well as Section
292A of the Companies Act, 1956. The Audit Committee is responsible for reviewing with the management the financial
statements and adequacy of internal audit function and to discuss significant internal audit findings. The Committee acts as a link
between the management, external and internal auditors and the Board of Directors of the Company.
During the year three meeings were held on the following dates — 30.06.2005,31.10.2005 & 31.01.2006
The constitution of the Committee and the attendance of each member of the Committee is given below :
Name Designation Category Profession Committee

Meetings
Attended
Mr. B. P. Muktieh Chairman Independent Director ' IDBI Nominee 1
Mr. Somen Bal Member Non-Executive Director Professional 3
Mr. Radharaman Bhattacharya Member Independent Director Professional 3
Mr. R. Muralidhar Member Independent Director Professional -
13
Shareholders / Investors Grievance Commitee:

The Share Transfer and Investors Grievance Committee has been authorised to approve transfer of shares, etc. In order to expedite
the process, the Board of Directors has also delegated the authority to approve the share transfers to the Company Secretary of
the Company.
During the year six meeting of the Committee were held on the following dates — 30.11.2005,17.12.2005,10.01.2006,04.02.2006,
10.02.206 & 28.02.2006.
The members of the Committee at present are as follows:

Name Designation Category
Mr. Somen Bal Member Non-Executive Director
Mr. K. M. Unnikrishnan Member Non-Executive Director
Share Transfers:
•*• All Shares have been transferred and returned within the prescribed time limit, provided the documents were complete.
•f Total number of shares transferred during the year 2005-2006 was 91060.
The Company obtains from Salil Banerjee, Practicing Company Secretary, Kolkata half yearly certificate of compaliance with the
share transfer formalities as required under clause 47(c) of the listing agreement with stock exchanges and files a copy of the
certificate with the stock exchanges.
Investor Relations:
The Company's Registrars and Share Transfer Agent CB Management Services Pvt. Ltd. are fully equipped to carry out the transfer
of shares and redress investors' complaints. All complaints received from Shareholders have been cleared within the financial
year. There is no complaint which has remained un-addressed.
General Body Meetings:
The location and time of the Annual General Meetings held during the last 3 years are as follows:
Annual General Meeting Date Time Venue No. of Special

Resolutions Passed
27th Annual General Meeting 21.06.2003 11:00 a.m. Science City, Seminar Hall 2
JBS Haldane Avenue
Kolkata 700 046
28th Annual General Meeting 27.08.2004 11:00 a.m. Eastern Zonal Cultural Centre 1
IA Sector III, Bidhannagar
Kolkata 700 091
29th Annual General Meeting 31:08.2005 11:00 a.m. Eastern Zonal Cultural Centre 3
IA Sector III, Bidhannagar
Kolkata 700 091
The Special Resolutions were usually passed on show of hands and mostly unanimously. There was no resolution passed by postal
ballot last year. Presently the Company does not have any proposal for Postal Ballot.
Notes on Directors Appointment / re-appointment:
Mr. R. Muralidhar, 62 an Indian national has been a Non-Executive Director since July 2003. Mr. Muralidharan is a graduate in
physics and also a graduate in Mechanical Engineering and also an MBA from IIM (Ahmedabad). Mr. Muralidhar has worked
in several blue chip companies like Warne Hindustan (Parke Davis), Hindustan Lever, EID parry, Max India, Bharat Technologies
and also in IFB Industries Ltd.
Mr. K. M. Unnikrishnan, 61 an Indian national has been a Non-Executive Director since July 2003. Mr. Unnikrishnan is a commerce
graduate & has also obtained post graduate diploma in Human Resource Management. Mr. Unnikrishnan has rich experience in
HRD matter. He also worked in IFB Industries Ltd.
14
IFH
IFB INDUSTRIES LTD.
CEO / CFO Certification:

The Financial Statements and the Cash Flow Statement for Financial Year 2005-06 have been certified to the board by Mr. Bijon
Nag, Executive Chairman and Mr. S. Bhattacharjee, CFO in accordance with the clause 49(v) of the Listing Agreement.
Code of Conduct:
The Board of IFB has laid down a code of conduct for all Board mambers and Senior Management of the Company. The Code of
Conduct is available on the website of the Company. All Board members and Senior Management personnel have affirmed
compliance with the Code of Conduct.
Disclosures
Related Party Transactions:
During the year under review, besides the transactions reported elsewhere in the Annual Report, the Company has not entered
into any transaction of material nature, with its promoters, the Directors or the Management or relatives etc that may have
potentional conflict with the interests of the Company at large.
Details of Non-Compliance by the Company :
During the last three years there were no penalties or stictures imposed on the Company by Stock Exchanges or SEBI or any
statutory authority for non-compliance of any matter related to capital market.
The Company does not have whistle Blower policy. The Company has complied with all mandatory requirements and has not
complied with non-mandatory requirements regarding sending half yearly financial performance to each household of
shareholders, training of Board members, mechanism for evaluating non-executive board members and whistle Blower policy.
However no personnel has been denied access, to the audit committee of the company.
Means of Communication:
The quarterly and half yearly results of the Company are forthwith communicated to the Stock Exchanges with whom the
Company has listing agreements as soon as the results are approved and taken on record by the board of directors of the Company.
Further the results are generally published in Financial Express (English) and Sambad pratidin (Bengali). No presentation was
made to institutional investors or analysts during the year.
General Shareholder Information:
(a) Annual General Meeting:
— Date : 30th August, 2006
— Time : 11A.M.
— Venue : Eastern Zonal Cultural Center
IA-290, Sector III, Bidhannagar, Calcutta-700 091
(b) Financial Calendar: April to March
Financial Reporting for —
— first quarter result Last week of July
— second quarter / half yearly result Last week of October
— third quarter result Last week of January
(c) Date of Book Closure 28.08.2006 to 30.08.2006 (both days inclusive)
(d) Dividend payment date Dividend is not recommended
(e) Listing of Equity Shares on Stock Exchanges • The Calcutta Stock Exchange Association Ltd., Kolkata.
• National Stock Exchange of India Ltd., Mumbai
• The Stock Exchange — Mumbai
• Delhi Stock Exchange Association Ltd., (Applied for Delisring)
Stock Code : • The Calcutta Stock Exchange Association Ltd., Kolkata —10019067
• National Stock Exchange of India Ltd., Mumbai — 505726
• Bombay Stock Exchange, Mumbai — 531875
ISINNo. : INE559A01017
15
(f) Stock Market Data:

NATIONAL STOCK EXCHANGE OF INDIA LIMITED
Period High (Rs.) Low (Rs.) Monthly Volume
April, 2005 13.20 . 10.75 226802
May, 2005 20.05 11.65 1403374
June, 2005 19.40 14.10 810005
July, 2005 18.45 " 15.90 469934
August, 2005 33.90 . 15.40 2339093
September, 2005 47.15 26.70 1237179
October, 2005 34.50 20.80 393995
November, 2005 28.45 23.10 161067
December, 2005 27.00 22.90 200788
January, 2006 29.70 21.95 220884
February, 2006 23.35 20.00 208741
March, 2006 24.60 20.00 277441
SHARE PRICE PERFORMANCE VERSUS THE NSE INDEX
Price Vs. Nifty

A nrvn nri
50 00
45.00 A, 3,500.00
40.00
35.00
» 30.00 ^
y \*_+^-+--+--~*^*
\_« m
3,000.00
o gQo QO
hP rice - Monthly
•g 25.00 / TS •
2,000.00
1 1"
2 ""*'"
' ^« "'?
inoex- Mifty Monthty
°- 20.00 _J| -a ^ 1 .OUU.UU
>~/>(-l f\f)
15.00
mr ^ 1,000.00
10.00
5.00 500.00
Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar-
05 05 05 05 05 05 05 05 05 06 06 06
MONTH
(g) Registrars and Share Transfer Agent: CB Management Services (P) Ltd.
P 22, Bondel Road, Kolkata - 700 019 • Tel: 2280-6692-93-94/2486/2937
Fax : (033) 22470263 • E-mail: cbmsll@cal2.vsnl.net.in
(h) Distribution of Shareholding as on 31st March, 2006
Slab of Shareholdings in nominal value Shareholders Percentage Amount in Rs. Percentage
1-500 16513 90.82 2065305 13.05
501 - 1000 871 4.79 723925 4.58
1001-2000 370 2.03 572977 3.62
2001-3000 133 0.73 3946898 2.19
3001-4000 69 0.38 246876 1.56
4001-5000 61 0.34 293466 1.85
5001 - 10000 79 0.43 571939 3.62
100001 and above . 87 0.48 11002061 69.53
Total : 18183 100 15823447 100
16
IF11
IFB INDUSTRIES LTD.
i) Shareholding Pattern as on 31st March 2006
Shareholder Category Number of shares held % of shareholding
1. Promoters Group 6930776 43.80

2. Mutual Funds and Unit Trust of India 42863 0.27
3. Banks, Financial Institutions & Insurance Companies 549492 3.47
4. Foreign Institutional Investors 1412300 8.93
5. Bodies Corporate 1786431 11.29
6. NRIs/OCBs 52381 0.33
7. In transit in Depository System 18195 0.11
8. General Public 5031009 31.80
Total : 15823447 100.00
Dematerialisation of Shares:
As on 31st March, 2006,910703 shares (57.54% of the Company's total number of shares) are in the dematerialised from. At
present the Company's shares are compulsorily traded in dematerialised form, as per notification issued by the Securities
and Exchange Board of India (SEBI). The ISIN allotted for the Equity Shares of the Company is INE559A01017.
(k) Outstanding GDRs/ADRs or

any convertible instruments There are no outstanding GDRs/ADRs or any other convertible instruments.
(k) Plant Location • 14, Taratolla Road, Kolkata - 700 088

• JL-71, P.O. Bishnupur,^Gangarampur, West Bengal
• L-l, Verna Electronic City, Verna, Selcete, Goa - 403 722
• 62,64 & 66, Corlim Indl. Estate, Corlim, Ilhas, Goa - 403 110
• E-3, New Indl. Area II, Mandideep, Bhopal, Dist. Raisen, M.P - 462 046
• 16/17, Visveswariah Indl. Estate, Whitefield Road, Bangalore - 560 048.
(m) Investor Correspondence • Corporate Office:

Plot No. IND 5, Sector I, East Kolkata Township, Kolkata - 700107
Tel: (033) 2442 8286/87/89/90/91 • Fax : (033) 2442 7779
E-mail: corp@ifbglobal.com
• Registrars and Share Transfer Agent:
CB Management Services (P) Ltd.
P 22, Bondel Road, Kolkata - 700-019
Tel: (033) 2280-6692-93-94/2486/2937 • Fax : (033) 22470263
E-mail: cbmsll@cal2.vsnl.net.in
On behalf of the Board

Place : Kolkata BIJON NAG
Dated : 30th June, 2006 Owirman
17
AUDITORS' REPORT on Corporate Governance
To the Members of IFB Industries Limited
We have examined the compliance of conditions of Corporate Governance by IFB Industries Limited for the year
ended 31st March, 2006 as stipulated in Clause 49 of the Listing Agreement of IFB Industries Limited with Stock
Exchanges.
The Compliancesof conditions of Corporate Governance is the responsibility of the Management. Our examination
was limited to procedures and implementation thereof, adopted by IFB Industries Limited for ensuring the
compliance of the conditions of the Corporate Governance. It is neither an audit nor expression of opinion on the
Financial Statements of the Company.
In our opinion and to the best of our knowledge and according to the explanations given to us, we certify that
IFB Industries Limited has complied with the conditions of the Corporate Governance as stipulated in the above
mentioned Listing Agreement.
We state that no investor grievance is pending against IFB Industries Limited as per records maintained by the
Shareholders / Investors Grievance Committee.
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 Deliotte Haskins & Sells

A. Bhattacharya
Place : Kolkata Partner
Date : 30 June, 2006 (M/No. 054110)
18
IF1I
IFB INDUSTRIES LTD.
10 Years' Highlights (Rs. million)

1995-96 1996-97* 1998 1999-00" 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
SALES AND EARNINGS
Sales & other income 2732 3808 2090 2479 1968 2029 1928 2234 2405 2652
Profit/loss (-) before tax 276 -616 -552 -769 -1453 -711 -781 -856 -344 -131
Profit/loss (-) after tax 266 -616 -552 -769 -1453 -711 -781 -856 -344 -137
Depreciation 112 201 159 200 169 172 234 218 208 183
Dividends 39 - - - _ _ _ _ _
Retained earnings 227 - - - _ _ _ _ _
ASSETS & LIABILITIES

Fixed assets (Gross) 2519 3602 3689 3709 3673 3709 3602 3595 3630 3673
Fixed assets (Net) 2135 3017 2945 2764 2572 . 2423 2094 1695 1390 1094
Total assets (Net) 3671 4363 4266 4014 3007 2742 2372 1972 1618 1240
Represented by
Net worth 2095 1479 943 193 ' -1245 -1943 -2719 -3576 -3553 -3491
Total borrowings 1576 2883 3323 3820 4247 4684 5092 5548 5171 4731
RATIOS
Earnings per share (Rs.) 20.7 -15.7 -41.0 -57.1 -114.4 -55.9 -60.49 -64.18 -25.76 -9.06
Net worth per share (Rs.) 163.3 109.8 70.0 14.3 -98.0 -152.9 -203.8 -267.9 -245.48 -220.66
OTHERS
Number of employees 789 776 631 653 548 651 606 635 657 686
Rate of dividend (%) 30.0 - - - _ _ _ _ _
* 18 months' period
** 15 months' period
19
AUDITORS' REPORT to the Members of IFB Industries Limited
We have audited the attached balance sheet of IFB Industries 4. In our opinion, the balance sheet, the profit and loss
Limited as at 31st March, 2006 and the profit and loss account account and the cash flow statement have been drawn up
and cash flow statement annexed thereto for the year ended on in accordance with the Accounting Standards referred to
that date. These financial statements are the responsibility of in sub-section 3(c) of section 211 of the Companies Act,
the Company's management. Our responsibility is to express 1956;
an opinion on these financial statements based on our audit.
5. On the basis of written representations received from the
We conducted our audit in accordance with auditing standards directors as on 31st March, 2006, and taken on record by
generally accepted in India. Those Standards require that we the Board of Directors, and specially in view of the order
plan and perform the audit to obtain reasonable assurance dated 14th May, 2004 passed by the Hon'ble Calcutta
about whether the financial statements are free of material High Court on a writ petition filed by the Company and
misstatement. An audit includes examining, on a test basis, theexistingdirectors challenging the applicability of clause
evidence supporting the amounts and disclosures in the (g) of sub-section (1) of section 274 of the Companies Act,
financial statements. An audit also includes assessing the 1956 which is pending final disposal, none of the directors
accounting principles used and significant estimates made by can be regarded as disqualified as on 31st March, 2006
the management, as well as evaluating the overall financial from being appointed as a director in terms of clause (g)
statement presentation. We believe that our audit provides a of sub-section (1) of section 274 of the Companies Act,
reasonable basis for our opinion. 1956;
6. In our opinion and to the best of our information and

As required by the Companies (Auditor's Report) Order, 2003
according to the explanations given to us, the said accounts
issued by the Central Government of India in terms of sub-
give the information required by the Companies Act,
section (4A) of Section 227 of the Companies Act, 1956, we
1956, in the manner so required and gives a true and fair
enclose in the Annexure a statement on the matters specified in
view in conformity with the accounting principles
paragraphs 4 and 5 of the said Order.
generally accepted in India :
Further to our comments in the Annexure referred to above, we i. in the case of balance sheet, of the state of affairs of
report that : the Company as at 31st March, 2006;
ii. in the case of the profit and loss account, of the loss
1. We have obtained all the information and explanations, of the Company for the year ended on that date; and
which to the best of our knowledge and belief, were
iii. in the case of the cash flow statement, of the cash
necessary for the purposes of our audit;
flows of the Company for the year ended on that
2. In our opinion, proper books of account, as required by date.
law, have been kept by the Company so far as appears
from our examination of such books; For DELOITTE HASKINS & SELLS
3. The balance sheet, the prof it and loss account and thecash A. Bhattacharya
flow statement dealt with by this report are in agreement Place : Kolkata Partner
with the books of account; Dated : 30th June, 2006 MfNo. 054110
20
IFB
IFB INDUSTRIES LTD.
ANNEXURE to the Auditors' Report

(Referred to in paragraph 3 of our report of even date)
The nature of the Company's business/activities during the year is such that clause (xiii) of Paragraph 4 of the Order
is not applicable to the Company.
(i) In respect of its fixed asset:
(a) The Company has maintained proper records showing full particulars, including quantitative details and
situation of its fixed assets.
(b) Physical verification of fixed assets is being conducted in a phased manner over a reasonable period of
time. According to the information and explanations given to us, no material discrepancies were noticed
on such verification.
(c) According to information and explanations given to us, certain plant and machinery worth Rs. 101,436
thousand, not capable of being put to further use in the production process, have been discarded by the
company during the year. In our opinion, it has not affexted the going concern status of the Company.
(ii) In respect of its inventories :
(a) As explained to us, inventories were physically verified during the year by the management at reasonable
intervals, with the exception of spares and accessory stock, gift items and stocks lying with job workers.
(b) In our opinion and according to the information and explanations given to us, the procedures of physical
verification of inventories followed by the management were reasonable and adequate in relation to the
size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations given to us, the Company has
maintained proper records of its inventories with the exception of stocks lying with job workers and no
material discrepancies were noticed on such physical verification. The Company is in the process of
reconciling inventory balances lying with job workers.
(iii) According to the information and explanations given to us the Company has not granted or taken any loans,
secured or unsecured, to or from companies, firms or other parties covered in the register maintained under
section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations given to us, there are adequate internal
control procedures commensurate with the size of the Company and the nature of its business for the purchase
of inventory and fixed assets and for the sale of goods and services and we have not observed any continuing
failure to correct major weaknesses in such internal controls.
(v) In respect of contracts or arrangements entered in the register maintained in pursuance of section 301 of the
Companies Act 1956, to the best of our knowledge and belief and according to the information and explanations
given to us:
(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered into the
register, maintained under the said Section has been so entered.
(b) In respect of transactions that have been entered in the register, where each of such transactions is in excess
of Rs. 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie
reasonable having regard to the prevailing market prices at the relevant time, where such market prices
are available.
21
(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted
any deposit from the public within the purview of Section 58A of the Companies Act, 1956 and the Companies
(Acceptance of Deposits) Rules, 1975 during the year under review.
(vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants
appointed by the management have been commensurate with the size of the Company and the nature of its
business.
(viii) We have broadly reviewed the books of account and records maintained by the Company relating to the
manufacture of electrical motors and machine tools, pursuant to the order made by the Central
Government for the maintenance of cost records under Section 209(l)(d) of the Companies Act, 1956 and are
of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have,
however, not made a detailed examination of the records with a view to determining whether they are
accurate or complete. To the best of our knowledge and according to the information and explanations given
to us, the Central Government has not prescribed the maintenance of cost records for any other product of the
Company.
(ix) In respect of statutory dues :
(a) According to the information and explanations given to us, the Company has been generally regular in
depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection
Fund, Employees State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Custom duty, Excise
duty, Cess and any other material statutory dues with the appropriate authorities during the year.
(b) Accordingto the information and explanations given to us, there is no disputed due on account of Income
tax, Customs duty, Wealth tax, Service tax and Cess. Details of disputed Sales tax and Excise duty which
have not been deposited as on 31st March 2006 on account of any dispute are given below :
Name of the Statute Nature of dues Value Period to which Forum where dispute
(Rs. in Thousand) the amount relates is pending
Central Sales Tax Act & Sales Tax, 37,137 1992-93 to Commercial Tax Officer,
Local Sales Tax Act Entry Tax and 2003-2004 Assistant Commissioner,
Trade Tax Deputy Commissioner,
Trade Tax Tribunal, Appelate
and Revisional Boad
Central Excise Act, 1944 Excise Duty 116 1994-95 and High Court & CEGAT
& Penalty 1998-99
(x) The accumulated losses of the Company have exceeded fifty per cent of its net worth as at the end of the year.
The Company has not incurred cash losses during the financial year covered by our audit. The Company had
incurred cash losses in the immediately preceding financial year.
(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted in
payment of dues to financial institutions, bank and debenture holders in the past. However, the Company has
entered into Memorandum of Settlement (MOS) with majority of its lenders and defaulted loans have been
rescheduled and payments are being made regularly to such lenders as per terms of such MOS. With respect
22
IF11
IFB INDUSTRIES LTD.
to lenders with whom no MOS has been agreed, the default amount cannot be ascertained in the absence of
confirmation from such lenders.
As the company has been referred to Board for Industrial and Financial Restructuring (BIFR), financial
restructuring package is pending approval before BIFR.
(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares,
debentures and other securities.
(xiii) As informed and explained to us, the Company has not dealt/traded in shares, securities, debentures and
other investments during the year.
(xiv) In our opinion and according to the information and explanations given to us, the Company has not given any
guarantee for loans taken by others from banks and financial institutions.
(xv) To the best of our knowledge and belief and according to the information and explanations given to us, the
Company has not availed any term loans during the year.
(xvi) According to the information and explanations given to us, and on an overall examination of balance sheet of
company, funds raised on short term basis have, prima facie, not been used during the year for long term
investment.
(xvii) According to the information and explanations given to us, the price at which the Company has made
preferential allotment of shares to a company covered in the Register maintained under Section 301 of the
Companies Act, 1956 is not prima facie prejudicial to the interests of the Company.
(xviii) According to the information and explanations given to us and the records examined by us, securities have
been created in respect of debentures issued by the Company.
(xix) The Company has not raised any money through public issues during the year.
(xx) To the best of our knowledge and belief and according to the information and explanations given to us, no
fraud on or by the Company was noticed or reported during the year.
For DELOITTE HASKINS & SELLS

Ouirtered Accoitntants
A. Bhattacharya
Place : Kolkata Partner
Date : 30th June, 2006 M/No. 0541W
23
BALANCE SHEET as at March 31 2006

As at March 31, 2006 As at March 31, 2005
Schedule Rs. '000 Rs. '000 Rs. '000 Rs.'000
I. SOURCES OF FUNDS
1. SHAREHOLDERS'FUNDS
a) Share Capital « 325,859 152,359
b) Reserves & Surplus 1,647,847 1,973,706 1,622,328 1,774,687
2. LOAN FUNDS
a) Secured 4,269,117 4,619,556
b) Unsecured 462,014 4,731,131 551,223 5,170,779
Total 6,704,837 6,945,466
II. APPLICATION OF FUNDS

1. FIXED ASSETS
a) Gross Block 3,673,531 3,629,993
b) Less: Depreciation 2,578,997 2,239,907
c) Net Block 1,094,534 1,390,086
2. INVESTMENTS 2 2
3. CURRENT ASSETS,
LOANS & ADVANCES
A. Current Assets
a) Inventories 287,432 343,183
b) Sundry Debtors 187,303 215,921
c) Cash & Bank Balances . 213,623 233,403
B. Loans and Advances 102,006 97,625
790,364 890,132
Less : Current Liabilities & Provisions

a) Current Liabilities 8 645,350 662,053
Net Current Assets 145,014 228,079
4. Profit and Loss Account 5,465,287 5,327,299
Total 6,704,837 6,945,466
NOTES TO FINANCIAL STATEMENTS 15
Schedules referred to above form an integral part of the Balance Sheet
In terms of our report of even date

For DELOITTE HASKINS & SELLS For and on behalf of the Board of Directors
Chartered Accountants Executive Chairman Bijon Nag
A. BHATTACHARYA
Director Somen Bal
Partner
Place : Kolkata Chief Finance Officer S. Bhattacharjee
Date : 30th June, 2006 Company Secretary G. Ray Chowdhury
24
IFB
IFB INDUSTRIES LTD.
PROFIT AND LOSS ACCOUNT for the year ended March 31, 2006
Year ended Year ended

March 31, 2006 March 31, 2005
Schedule Rs. '000 Rs. '000 Rs. '000 Rs. '000
INCOME
Sale of Products (Gross) 2,688,618 2,618,868
Less : Excise Duty 287,690 247,324
Less : Sales Tax — 221,422
Sales (Net) 2,400,928 2,150,122
Service Income 152,228 160,284
Other Income 9 99,231 94,664
Total : 2,652,387 2,405,070
EXPENDITURE
Raw Materials and Finished Goods 10 1,227,280 1,157,187
Employees' Remuneration and Benefits 11 176,789 150,418
Operating and Administration Expenses 12 1,183,092 1,103,538
Depreciation / Amortisation 5 183,235 208,051
Financial Charges 13 120,447 610,630
Total : 2,890,843 3,229,824
Profit/doss) before Extra-ordinary and

Prior-Period Items (238,456) (824,754)
Prior-Period Items 14 (772) (5,434)
Exceptional items : Gain on Interest Waiver 108,076 486,201
Profit/(Loss) Before Taxation (131,152) (343,987)
Provision for Taxation — —
Provision for Fringe Benefit Tax (6,836) —
Profit/(Loss) After Taxation (137,988) (343,987)
Balance brought forward from previous years (5,327,299) (4,983,312)
Available for appropriations (5,465,287) (5,327,299)
APPROPRIATIONS :
Balance carried to Balance Sheet (5,465,287) (5,327,299)
Basic Earnings per share - Rs. 15 (9.08) (25.76)
NOTES TO FINANCIAL STATEMENTS 15
Schedules referred to above form an integral part of the Profit and Loss Account

Chartered Accountants Executive Chairman Bijon Nag
A. BHATTACHARYA
Director Somen Bal
Partner
Place : Kolkata Chief Finance Officer S. Bhaltacharjee
Company Secretary G. Ray Chowdhury
Date : 30th June, 2006
25
CASH FLOW STATEMENT for the year ended March 31, 2006
Year ended March 31, 2006 Year ended March 31, 2005
Rs. '000 Rs. '000 Rs. '000 Rs. '000
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Loss before Tax, Prior Period & Extraordinary Items (238,456) (824,754)
Adjustment for:
Depreciation 183,235 208,051
Impairment Loss on Assets 157,088 135,782
Provision for Doubtful debts / advances 6,571 1,105
Write off of Doubtful debts / advances / assets 2,789 3,700
Write back of liabilities / advances / deposits / provisions (5,807) (16,310)
Write off of Fixed Assets
(Gain) / Loss on disposal of Fixed Assets 122
Unrealised Exchange (Gains) / Loss 178
Interest expenses 120,447 610,630
Dividend income (1)
Operating Profit Before Working Capital Adjustments 225,866 118,503
Adjustments for:
(Increase)/Decrease in Inventories 55,752 (147,241)
(Increase)/Decrease in Trade and Other Receivables 15,167 (9,028)
Increase/(Decrease) in Current Liabilities (10,897) 214,672
Cash Generated from Operations 285,888 176,906
Direct Taxes (7,126) 2,916
Cash Flow from Prior Period items (772) (1,371)
Net Cash from Operating Activities 277,990 178,451
B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (45,979) (39,043)
Proceeds from Disposal of Fixed Assets 1,208 9
Proceeds from Sale of Investments
Dividend Income
Net Cash from Investing Activities (44,770) (39,033)
C. CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of Share Capital 182,950 14,125
Repayment of long term borrowings (435,950) (133,446)
Interest Paid
Net Cash used in Financing Activities (253,000) (119,321)
Net Increase in Cash & Cash Equivalent (19,780) 20,097
Cash & Cash Equivalent at beginning of year 233,403 213,306
Cash & Cash Equivalent at end of year 213,623 233,403
Schedules referred to above form an integral part of the Balance Sheet

A. BHATTACHARYA Executive Chairman Bijon Nag
Partner Director Somen Bal
26
SANSCO SERVICES - Annual Reports Library Services - www.sansco.net"~~~
IFB
IFB INDUSTRIES LTD.
SCHEDULES to Balance Sheet
As at March 31, 2006 As at March 31,2005

Rs. '000 Rs.'OOO Rs. '000 Rs. '000
SCHEDULE -1
SHARE CAPITAL
Authorised:
35,000,000 Equity Shares of Rs. 10/- each 350,000 350,000
(Previous year 35,000,000)
30,000,000 Cumulative Convertible Preference Shares of Rs. 10 each 300,000 600,000
30,000,000 Cumulative Redeemable Preference Shares of Rs. 10 each
(Previous year Nil) 300,000
950,000 950,000
Issued, Subscribed and Paid-up :
15,823,447 Equity Shares of Rs. 10/- each, fully paid up 158,234 144,734
(Of the above equity shares 2,950,760 equity shares were
allotted as fully paid up by way of bonus shares by
capitalisation of Securities Premium)
Add: Forfeited Shares 7,625 165,859 7,625 152,359
1,60,00,000 - 5% Cumulative Redeemable Preference Shares of 160,000

Rs. 10 each, fully paid up (Previous year: Nil)
(Issued to IDBI on conversion of loan)
325,859 152,359
Balance Addition Withdrawal Balance

as on 31st during the during the as on 31st
March, 2005 year year March, 2006
SCHEDULE-2
RESERVES & SURPLUS
Capital Redemption Reserve 500 - 500

Securities Premium Account 1,191,135 9,450 1,200,585
Debt Restructuring Reserve 353,205 16,069 369,274
Revaluation Reserve 17,332 - 17,332
Debenture Redemption Reserve 60,156 - 60,156
1,622,328 25,519 1,647,847
27

As at March 31,2006 As at March 31, 2005
Rs. '000 Rs. '000 Rs. '000 Rs. '000
SCHEDULE-3
SECURED LOANS
Term Loans
Domestic Financial Institutions/Banks 3,074,858 3,359,518
Foreign Lending Institutions 3,074,858 3,359,518
Working Capital Facilities 918,485 959,750
14% Non-Convertible Debentures - A Series 13,827 20,367
14% Non-Convertible Debentures - B Series 74,303 99,651
18% Non-Convertible Debentures - C Series 142,805 129,431
17.5% Non-Convertible Debentures - D Series 44,839 50,839
4,269,117 4,619,556
SCHEDULE-4
UNSECURED LOANS
Financial Institutions 433,034 468,048
Others 28,980 83,175
462,014 551,223
SCHEDULE-5
FIXED ASSETS (Rs. '000)
PARTICULARS GROSS BLOCK AT COST DEPRECIATION / AMORTISATION NET BLOCK
Adjust-
Adjust- Impair ments/
Additions ments/Sold Provided ment/ disposal
As at during during As at As at during Discarded during As at As at As at
01.04.2005 the year the year 31.03.2006 01.04.2005 the year Assets the year 31.03.2006 31.03.2006 31.03.2005
Freehold Land 71,106 - - 71,106 - - - - 71,106 71.106

Leasehold Land 23,326 - - 23326 14,723 639 - - 15,362 7,964 8,603
Building 314,125 6,000 - 320,125 194,903 10,786 270 - 205,959 114,166 119,222
Plant and Machinery 3,121,683 27,666 (1,106) 3,148,243 1,971,425 163,887 155,492 (504) 2,290,300 857,943 1,150,258
Computers 31,438 4,228 (269) 35,397 20,223 3,094 69 (257) 23,129 12,268 11,215
Furniture & Fixture 50382 2302 (1,044) 51,640 28,114 3,064 1,257 (472) 31,963 19,677 22,268
Motor Vehicles 12,831 889 (22) 13,698 10,255 1,215 - - 11,470 2,228 2,576
INTANGIBLE ASSETS
Computer Software 1,162 1,311 - 2,473 264 550 - - 814 1,659 898
Total (A) . 3,626,053 42396 (2,441) 3,666,008 2,239,907 183,235 157,088 (1,233) 2,578,997 1,087,011 1386,146
Capital
Work in-Progress (B) 3,940 12,735 (9,152) 7,523 - - - - - , 7,523 3,940
Total (A+B) 3,629,993 55,131 (11,593) 3,673,531 2,239,907 183,235 157,088 (1,233) 2,578,997 1,094,534 1390,086
Previous Year 3394,508 39,220 (3,735) 3,629,993 1,899,502 208,051 135,782 (3,428) 2,239,907 1,390,086
28
IF1I
IFB INDUSTRIES LTD.

SCHEDULE-6
INVESTMENTS (LONG TERM) AT COST
Face Value Quantity Amount
March 31,2006 March 31, 2005 March 31,2006 March 31, 2005
Rs. '000 Rs. '000
QUOTED INVESTMENTS
I. In Equity Shares
Ashok Leyland Ltd. Rs. 1.00 1,500 1,500
(Face value of Rs. 107- per share
subdivided into 10 shares of Rs. l/-
eachw.e.f. 7 July, 2004)
Total: 2 2
Aggregate book value of quoted investments 2 2

Aggregate market value of quoted investments 60 32

Rs. '000 Rs. '000 Rs. '000 Rs. '000
SCHEDULE-7
CURRENT ASSETS, LOANS AND ADVANCES
A. CURRENT ASSETS
a. Inventories
(As taken, valued and certified by the Management)
Raw Materials & Components (including goods in transit) 91,266 90,341
Work-in-Progress 48,032 38,898
Finished Goods, Press Tools and Dies 126,494 189,712
Stores and Spare Parts 19,677 22,585
Stock of Scrap 1,963 2,87,432 1,647 343,183
b. Sundry Debtors (unsecured)
Debts exceeding six months:
Considered Good 10,145 6,045
Considered Doubtful 63,749 57,891
73,894 63,936
Other Debts:
Considered Good 177,158 209,876
Considered Doubtful
251,052 273,812
Less : Provision for Doubtful Debts 63,749 187,303 57,891 215,921
29

Rs. '000 Rs. '000 Rs. '000 Rs. '000
SCHEDULE - 7
CURRENT ASSETS, LOANS AND ADVANCES (Contd.)
c. Cash and Bank Balances
Cash in hand (including cheques in hand) 10,825 1,217
Remittance in Transit 8,959 6,607
With Scheduled Banks:
— In Current Account, etc. 115,059 152,693
— In Fixed / Margin Deposit Account 78,780 213,623 72,886 233,403
688,358 792,507
B. LOANS AND ADVANCES (Unsecured)
Advances recoverable in cash or in kind or for value
to be received or pending adjustments :
— Considered Good 67,835 66,766
— Considered Doubtful 2,734 2,711
70,569 69,477
Less : Provision for Doubtful Advances 2,734 67,835 2,711 66,766
Deposits with Customs, Port Trust, Excise and Others 27,695 24,673
Advance Income Tax (Tax deducted at source) 6,476 6,186
102,006 97,625
790,364 890,132
SCHEDULE - 8
CURRENT LIABILITIES
Sundry Creditors
— For Goods 246,134 343,855
— For Expenses 269,442 515,576 202,070 545,925
Security Deposits 4,798 8,359
Advance from Customers 124,976 107,448
Provision for Fringe Benefit Tax
Provisions
Investor Education and Protection Fund shall be credited by the
following amounts namely * :-
Unclaimed Matured Deposits 197
Interest Accrued on Deposit 124
645,350 662,053
* There is no amount due and outstanding as at Balance Sheet date

to be credited to Investor Education and Protection Fund
30
IFII
IFB INDUSTRIES LTD.
SCHEDULES to Profit and Loss Account

Year ended March 31,2006 Year ended March 31, 2005
Rs. '000 Rs. '000 Rs. '000 Rs. '000
SCHEDULE-9
OTHER INCOME
Interest (Gross) 6,306 5,794
[Tax deducted at source : Rs.1,450 (Previous Year: Rs. 1,435)]

Dividend 1 1
Sale of Scraps 36,750 32,007
Insurance Claims 2,022 2,924
Rental Income 9,469 9,553
Gain on Exchange fluctuation 1,287 910
Writeback of provision no longer required 5,807 16,310
Overriding Commission / TOT / Octroi Reimbursement 925
Others 36,664 27,165
99,231 94,664
SCHEDULE -10
RAW MATERIALS, STORES & SPARES
CONSUMED AND FINISHED GOODS
a) Raw Materials Consumed :
Opening Stock 90,341 46,440
Add: Purchases 1,074,609 1,246,217
1,164,950 1,292,657
Less: Closing Stock (89,823) (90,341)
Net Consumption of Raw Materials 1,075,127 1,202,316
b) Stores and Spares Consumed 99,996 64,729
31
SCHEDULES to Profit & Loss Account

Year ended March 31,2006 Year ended March 31,2005
Rs. '000 Rs. '000 Rs. '000 Rs. '000
SCHEDULE-JO
RAW MATERIALS, STORES & SPARES
CONSUMED AND FINISHED GOODS (Contd.)
c) (Increase)/Decrease in Finished Goods, WIP and Scrap :

Opening Stock
— Finished Goods 178,694 76,088
— WIP 38,898 32,204
— Scrap 1,647 1,089
219,239 109,381
Less: Closing Stock
— Finished Goods 117,087 178,694
— WIP 48,032 38,898
— Scrap 1,963 1,647
167,082 52,157 219,239 (109,858)
1,227,280 1,157,187
SCHEDULE-11
EMPLOYEES' REMUNERATION AND BENEFITS
Salaries, Wages and Bonus 150,202 121,201

Contribution to Provident and Other Funds 14,821 15,367
Workmen and Staff Welfare Expenses 11,766 13,850
176,789 150,418
32
IF11
IFB INDUSTRIES LTD.
SCHEDULES to Profit & Loss Account

Year ended March 31,2006 Year ended March 31,2005
Rs.'OOO Rs.'OOO Rs.'OOO Rs. '000
SCHEDULE -12
OPERATING AND ADMINISTRATION EXPENSES
Rent 13,038 9,649
Insurance 3,664 3,807
Freight, octroi and carriage 90,339 80,234
Power and fuels 26,636 26,152
Ancillary cost 99,433 80,215
Rates & Taxes 2,246 2,710
Office expenses 64,045 44,600
Advertisement and sales promotion 175,713 156,097
Trade scheme and discounts 339,104 266,364
Travelling 56,298 51,405
Repairs:
Buildings 1,402 1,622
Plant and machinery 19,495 15,166
Others 10,546 31,443 31,002 47,790
(Gain)/loss on disposal of Fixed Assets - 122
Exchange Fluctuation (Loss) - 961
Write off of assets 1,192 -
Provision for Customs Duty Liability 1,404 67,456
Impairment / Discarded Fixed Assets 157,088 135,782
Write off of doubtful debts / advances / deposits 2,789 3,700
Provision for doubtful debts and advances 6,571 1,105
Bank charges 5,493 4,363
Directors' sitting fees 35 27
Service Expenses 65,023 89,796
Other sundry expenses 41,538 31,203
1,183,092 1,103,538
SCHEDULE-13
FINANCIAL CHARGES
Interest to banks/financial institutions 103,999 580,525
Interest on debentures 16,436 30,105
Others 12
120,447 610,630
SCHEDULE-14
ADJUSTMENTS FOR PRIOR PERIOD ITEMS
Prior Period Itmes:
Depreciation
Others 772 772 5,434 5,434
772 5,434
33
SCHEDULES to Balance Sheet and Profit & Loss Account

SCHEDULE-15
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON FINANCIAL STATEMENTS
Unless otherwise specified, all amounts are in Rupees thousands.
I. SIGNIFICANT ACCOUNTING POLICIES :

1. Basis of accounting:
The financial statements are prepared in accordance with the accounting principles generally accepted in India. The
Company follows the accrual method of accounting.under historical cost convention modified by revaluation of
certain fixed assets as & when undertaken.
2. Revenue recognition:
Revenue from sales of products is recognised on the basis of dispatch to customers and subsequent endorsement of title
to the property in the goods.
Revenue from Services are recognised on Proportionate Completion method.
Interest on deposits is recognised on a time proportion basis taking into account the amount outstanding and the rate
applicable. Dividends from investment in shares is recognised when the Company's right to receive payment is
established. ' .
3. Fixed assets:
Fixed assets are stated at cost of acquisition/construction or at revalued amount less depreciation and impairment
losses. The cost of asset comprises its purchase price and any other attributable cost incurred for bringing the asset to
•its working condition for its intended use. Where a fixed asset has been revalued upwards, the revalued amount is
credited to owner's interest under the head Revaluation Reserves.
Capital work in progress includes advances for capital items, items under installation and items in transit. In case of
own manufactured items like tools, jigs, proportionate burden of overhead as applicable is also treated as part of
cost.
Expenditure incurred on replacement/modification to fixed asset is capitalised only when such expenditure results in
increase in the economic life of such asset.
4. Intangible aSsHts:
Software expected to provide future enduring economic benefits is stated at cost less amortization.
All upgradation/ enhancements are charged off as revenue expenditure unless they bring significant additional
benefits.
5. Depreciation / Amortisation:
Depreciation is provided at the rates specified in Schedule XIV of the Companies Act, 1956 on straight line method on
plant and machinery and other fixed assets excepting building where written down value method is applied.
Assets whose actual cost does not exceed five thousand rupees are fully depreciated in the year of acquisition.
Intangible assets are amortised over the best estimate of its useful life ranging between a period of 3 to 5 years.
34
I
IFB INDUSTRIES LTD.

(Unless otherwise specified, all amounts are in Rupees thousands)
6. Impairment of fixed assets :

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the
carrying amount of the Company's fixed assets. If any indication exists, an asset's recoverable amount is estimated. An
impairment loss is recognized whenever the carrying amount of assets exceeds its recoverable amount. The recoverable
amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value based on an appropriate discount factor.
7. Foreign currency transactions:

Transactions denominated in foreign currency are recorded at the exchange rates prevailing on the date of the
transaction. Any income or expense on account of exchange differences either on settlement or on translation of
transactions other than those relating to fixed assets is recognised in the profit and loss account.
Monetary assets and liabilities denominated in foreign currency are translated at the rate of exchange prevailing on the
date of the balance sheet and resultant gain or loss is recognised in the profit and loss account. Non monetary items
denominated in foreign currency are carried at cost.
8. Investments:
Investments are classified as long term and valued at cost.
9. Inventories:
Basis of Valuation:
• Raw materials, components, work in progress and stores and spares: At cost
• Finished goods: Lower of cost or net realisable value
• Scrap: Net realisable value
Cost is ascertained on weighted average method.
10. Retirement and other benefits

Contribution to provident fund is made as per the provisions of Employees' Provident Fund and Miscellaneous
Provisions Act, 1952 and charged to profit and loss account.
The Company has gratuity and superannuation scheme for all its employees and contribution under this scheme is
made to Life Insurance Corporation of India under an approved scheme and charged to profit & loss accounts, liabilities
pertaining to gratuity for the year is paid/provided for on the basis of actuarial valuation.
Liability for leave encashment is provided as per actuarial valuation.
11. Deferred Taxation

Deferred tax is recognized subject to the consideration of prudence in respect of deferred assets, on timing differences,
being the difference between taxable income and accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.
35
SCHEDULES attached to Balance Sheet and Profit & Loss Account

II. NOTES ON FINANCIAL STATEMENTS
1. Share Capital:
a) During the year the company had issued 13,50,000 equity shares of Rs 10 each at a premium of Rs.7 per share fully paid
up on preferential basis. The proceeds of the preferential issue has been utilized for repayment to secured creditors of
the company.
b) As a part of debt restructuring programme, Industrial Development Bank of India (IDBI) agreed to convert Rs 1600 lakhs
of the settlement amount into 5% Cumulative Redeemable Preference Shares at par in favour of IDBI which shall be
redeemed in four quarterly graded instalments as per repayment schedule sanctioned by IDBI. Accordingly the
company has issued 160,00,000 5% Redeemable Cumulative Preference Shares of Rs 10 each at par to IDBI on 5th
October, 2005.
c) Preference dividend payable on 5% Redeemable Cumulative Preference Shares issued to IDBI amounting to Rs 3901 has
not been provided in absence of profit.
2. Going Concern :
The Company has become a sick industrial undertaking. The matter was referred to the Ld. BIFR and subsequently vide order
dated 30th July 2004 the Company has been declared sick. Industrial Development Bank of India Ltd. (IDBI) has been
appointed as the Operating Agent. The matter is under consideration of Ld. BIFR. However, the units of the Company are
in regular operations. In line with the said order of the Ld. BIFR the Company has already tied up settlements with majority
of its lenders and draft rehabilitation scheme has been submitted to operating agency. Accordingly, the management
considers that the going concern assumption is not vitiated. In view of this, the financial statements have been prepared on
the assumption that the Company is a going concern despite its net worth being fully eroded.
3. Secured loan:
a. Non Convertible Debentures are secured by way of first charge on certain immovable and movable properties. However
settlements have been reached with majority of lenders and consequently such loans have been rescheduled.
b. Term loan under Equipment Finance Schemes is secured by hypothecation of specific assets and counter guarantees by
a present and an erstwhile director.
c. Term loans from IDBI are secured by way of first mortgage on the immovable properties, hypothecation of all moveable
assets except book debts and assets, which are specifically charged to others and pledge of equity shares of the Company
held by the promoters. However settlements have been reached with the lender and consequently such loans have been
rescheduled.
d. Working capital facilities are secured by hypothecation / pledge ranking pari-passu on current assets, personal
guarantees and by way of second charge created on immovable properties. However settlements have been reached
with majority of lenders and consequently such loans have been rescheduled.
4. The Company has entered into Memorandum of Settlement with certain lenders on one-time basis repayable over agreed
period of time. Out of such settlements, the Company has fully paid certain lenders in terms of said settlements withinbalance
sheet date. Consequently, the Company has recognized interest waivers amounting to Rsl08,076 (Previous Year Rs. 486,201)
by crediting Profit & Loss Account as exceptional item and transferred principal waivers amounting to Rs.16,069 (previous
year Rs. 353,205) to Debt Restructuring Reserve Account as Free Reserves in the balance sheet.
5. Fixed assets:
The Company has reviewed potential generation of economic benefits from its cash generating units and concluded that the
fixed assets relating to a cash generating unit are not capable of generating any economic returns over their useful life.
Consequently, the fixed assets representing plant and machinery, electrical equipments and furniture and fixtures with book
36
IFB
IFB INDUSTRIES LTD.
SCHEDULES attached to Balance Sheet and Profit & Loss Account

values aggregating to Rs.72,398(Previo-us Year Rs 219,686) as of 31st March 2006, relating to the manufacture of microwave
ovens and dishwashers have undergone impairment for change in technology, product design and availability of cheaper
alternative sources and have been written down to their recoverable amount being Rsl6,746 (Previous Year Rs 83,904), based
on independent valuation report. As a result, the impairment loss of Rs 55,652(Previous Year Rs 135,782) has been charged
to profit and loss account.
6. In view of Hon'ble BIFR direction to the company for submission of draft rehabilitation scheme with 30th September, 2005
as the cut - off date, interest amounting to Rs. 118, 642 on loans yet to be settled has not been considered in these
accounts.
7. Dues to SSIs
The total dues outstanding to SSI Units for more than 30 days amounts to Rs. 40961 (previous year Rs.43,967) (as per separate
Annexure attached). '
8. Managerial remuneration:
31.03.2006 31.03.2005
(Rs. 'OOP) (Rs. '000)
a) Director's Sitting Fees 35 27

b) Remuneration to Whole-time Directors:
Salary 1,641 1,344
Contribution to Provident, Gratuity and
Superannuation Fund 240 227
Monetary value of perquisites 145 228
2026 1799
9. Commitments and contingencies:
i) Outstanding capital commitments 1,941 8,392
ii) Bills discounted by Banks 6,998 2,208
iii) Disputed sales tax matters, excise duties contested in appeals 37,253 77,651
• These disputes mostly relate to incorrect classification of items
and arbitrary disallowances of claims of the Company under
various state laws, which are under appeal. The management is
of the opinion that these demands are not sustainable in law and
is hopeful of succeeding in these appeals.
iv) Indemnity bonds executed in favour of excise and customs 12,821 1,546
v) Guarantees given by the bankers on behalf of the Company 16,585 16,537
vi) Export Obligation under EPCG License issued by DGFT, New Delhi 21,759
• This represents penalty levied for alleged non fulfillment of export
obligations, which are under appeal. The management is hopeful
of succeeding in appeals.
37

vii) Corporate guarantee for advance licences 149,844 149,844

viii) Claims against the Company not acknowledged as debts. ts. 62,296 1,641
This represents claims relating to material rejection.
The management is of the opinion that these claims are
not tenable
10. Segment reporting:
Year ended 31st March, 2006
Engineering Home Others Total

Rs. '000 Rs. '000 Rs. '000 Rs. '000
Revenue - External 531^87 2,113,048 7,852 2,652,387

489,537 2,129,222 7,733 2,626,492
Total Revenue 531,487 2,113,048 7,852 2,652,387

489,537 2,129,222 7,733 2,626,492
Segment Results (20,264) (56,125) (41,619) (118,009)

(22,127) . (84,514) (107,483) (214,124)
Less: Interest cost for the year 12,791 94,936 12,719 120,447
64,849 481,298 64,483 610,630
Profit / (Loss) before tax, exceptional & Prior Period items (33,055) (151,062) (54,339) (238,456)
(86,976) (565,812) (171,966) (824,754)
Segment Assets 430,754 1,337,002 117,144 1,884,900

498,758 1,607,418 174,044 2,280,220
Segment Liabilities 609,965 4,169,233 597,282 5,376,480
636,368 4,553,423 643,042 5,832,833
Other Segmental Information:
Depreciation 93,983 87,229 2,023 183,235
108,781 97,173 2,097 208,051
Capital Expenditure 13,711 28,555 130 42,396
3,275 30,589 1,416 35,280
Non Cash Expenditure other 420 149,600 150,020
—
than Depreciation 221 139,262 139,483
(figures for the previous year have been shown below each item)
11. Related party transactions :

The Company has the following related parties in accordance with Accounting Standard 18 issued by the Institute of
Chartered Accountants of India:
Associate Companies : IFB Agro Industries Limited, IFB Automotive Private Limited, Autoliv IFB
India Private Limited, Travel Systems Private Limited, CPL Projects Limited.
Key Management Personnel: Mr. Bijon Nag, Executive Chairman
38
IFH
IFB INDUSTRIES LTD.

Transactions with related parties :

Key
Management Associate
Personnel Companies Subsidiaries Total
Rs. '000 Rs. '000 Rs. '000 Rs. '000
31.3.06 31.3.05 31.3.06 31.3.05 31.3.06 31.3.05 31.3.06 31.3.05
Sales, Services and Other Income 275,181 236,630 275,181 236,630

Purchases 7,205 - 7,205 -
(iii) Advances - 1,442 - 1,442
(iv) Outstanding Balances:
Debtors 32,018 27,659 - 32,018 27,659
Advance / Deposits 10,774 12,334 - 10,774 12,334
Creditors 1,681 3,985 1,681 3,985
Other Receivables 1,684 951 1,684 951
(iv) Remuneration 2,026 1,799 2,026 1,799
(v) Expenditures on Other Services 10,170 4,740 10,170 4,740
12. Auditors' remuneration:

31.03.2006 31.03.2005
(Rs. 'OOP) (Rs. 'OOP)
Audit fees 845 745

Others 660 605
Reimbursement of expenses 71 77
1,576 1,427
13. Earnings per share :
31 March, 2006 31 March, 2005
a) Prof it/(Loss) after taxes before exceptional and Prior period items (238,456) (824,754)
b) Net profit/(Loss) after exceptional and prior Period items (131,152) (343,987)
c) Weighted average number of equity shares outstanding 15,204,697 13,352,735
d) Basic earning per share of Rs 10 each(in Rs)
- Before exceptional and prior period items (16.47) (61.76)
- After exceptional and prior period items (9.06) (25.76)
The Company does not have any potential equity shares and hence diluted EPS has not been calculated.
14. Certain balances with sundry debtors, loans and advances, deposits, unsecured loans, sundry creditors, stocks lying with
third parties and advances from customers are subject to confirmation.
15. Previous year's figures have been regrouped and rearranged wherever necessary.
39

16. Other information:

31 March, 2006 31 March, 2005
(Rs. '000) (Rs. '000)
a) Value of Imports calculated on GIF Basis :
Raw Materials & Components 216,013 220,882
Stores & Spares 9,907 106
Trading Goods 99,251 214,035
b) Expenditure on Foreign Currency on account of:
Foreign Travel 6,723 4,896
Professional Fees 527
Repairs & Maintenance 1,100 1,046
c) Earnings in Foreign Currency on account of:

FOB value of Exports 11,873 7,101
17. Particulars regarding Capacity, Stocks and Sale of Finished Goods and Raw Materials consumed:
a) Particulars regarding Capacity and Production:
31. 03. 2006 31. 03. 2005
Units of Licensed Installed Actual Licensed Installed Actual

Measurement Capacity Capacity Production Capacity Capacity Production
Press Tools & Dies Rs. '000 6,000 6,000 12,164 6,000 6,000 6,426
Nos. 85 85 41 85 85 15
Fine Blanked Components (Heavier) M.T. 1,500 1,500 1,411 1,500 1,500 1,148.73
Fine Blanked Components

(Auto Products) M.T. 2,000 2,000 1,819 2,000 2,000 1,842.57
Heat Treated & Phosphated

Components M.T. 450 450 522 450 450 386.76
Motor Nos. NA 100,000 85,933 NA 100,000 77,194
Home Appliances Nos. 400,000 225,000 87,567 400,000 225,000 85,745
Note: Installed Capacity is certified by the Management and is for a period of twelve months.
40
IF11
IFB INDUSTRIES LTD.

b) Stock and Sale of Finished Goods:
31.03.2006 31.03.2005
Unit of Opening Sale Closing Opening Sale Closing
Measurement Stock * (Gross) Stock Stock (Gross) Stock
Press Tools & Dies Rs. '000 12,604 6,426

Nos. 32 24 49 29 12 32
Fine Blanked Components Rs. '000 1315 213,108 1018 1427 200,901 1315
(Heavier) MT 16.01 1,308.58 7.94 14.66 1,147.18 16.01
Fine Blanked Components Rs. '000 7892 334,405 3777 1559 306,724 7892
(Auto Product) MT 49.11 1,943.45 29.45 0.40 1808.60 49.11
Motor Rs. '000 1332 2,861 1,274 — 98,301 1332
Home Appliances Rs. '000 135,185 17,91,224 50,196 57,475 16,69,162 135,185
Nos. 9444 91,794 5,197 6150 82,451 9,444
Trading Sales Including Export Rs. '000 32,970 332,045 60,823 15627 336,741 32,970
Others Rs. '000 — 2,372 — — 613 —

Total Rs. '000 178,694 2,688,618 1,170.88 76,088 2,618,868 178,694
Notes: (I) Wherever Installed Capacity are only in terms of value, the information above are also in terms of value only.
c) Raw Materials and Stores & Spares consumed:

Raw Materials Stores & Spares
Quantity (MT) Value (Rs. '000) Value (Rs. '000)
31.03.2006 31:03.2005 31.03.2006 % 31.03.2005 % 31.03.2006 % 31.03.2005 %
IMPORTED
Steel 1,257.266 1,174.40 87,088 8.10 90,183 7.44 - - - -
Comp. & Spares - - 441,771 41.09 109,868 9.06 - - - -
Consumables - - - - - - 575 0.58 1,681 2.60
INDIGENOUS
Steel 6,336.614 5,072.75 304,779 28.35 298,959 19.79 - - - -
Copper 58,334 55.52 15,997 1.49 16,000 1.22 - - - -
Brass 3,000 2.00 752 0.07 369 0.03 - - - -
Aluminium 174.000 190.49 18,253 1.70 18,226 1.50 - - - -
Comp. & Spares - - 204,001 18,67 739,199 60.95 - - - -
Consumables - - 2,486 0.23 - - 99,421 99.42 63,048 97.40
Total 7,829,214 1,075,127 100 1,212,712 100 99,996 100 64,729 100

A. BHATTACHARYA Executive Chairman Bijon Nag
Partner Director Somen Bal
41
Annexure to the Outstanding Dues of SSI Units as on 31st March, 2006
Ami Plastics, Alpana Enterprises, Asia Trade Combines, ATC Industries, A.P.Industries, A.V.P. Cement Products, Aerotec,
Chodancar Engg & Services, Chemi Flow Rubber Industries,Dutta & Dasgupta, Deshmukh Services, Diemech Industries, Goa
Micro Cellular Industry, Gomantak Press Tools Pvt. Ltd., Gauri Packing, High Tech Press Tools(JB), Javadani Engineering
Works(ST), Jai Wood Works, Kaushik Rollformers Pvt. Ltd., Merlin Machinfabrik (JB), Master Pressing works, Misqutta
Engineering Pvt. Ltd, Merlin Machinfabrik (JB), Master Pressing Works, Misqutta Engineering Pvt. Ltd, Mavis Enterprises,
Niketch Metcom (P) Ltd., Polytech Industries, Rajesh Tools & Instruments, Ritika Packing Pvt. Ltd., Supreme Electricals, Standard
Screw MNFG. Co., Sandhya Enterprises, Super Pack, Thuse Elektronics P. Ltd., Teckno Forged, United Metal Components QB),
United Rubber Industries,Vikas Electrics Pvt. Ltd., A.Engineering Co., A.M.Engineering, Amrit Engg Industries,
B.B.Enterprises,B.engg Works.Calcutta Stripwire Industries, Debnath Engineering Enterprise, Durga Engg Works, Family
Welfare Co-operative Society, Friends Trading, GME Industry, G.P.Enterprise, Hindusthan Small Industry, Hydro Mech
Industries, India Trade Centre, Kalimata Industrial Corp, Kay Vee Engineering Centre, Maa enterprise, Manayog Enterprise,
Masterline Industries, Modern Metal Works, Mondal Enterprise, M.Precision Engg Works, Platewell & Co., Santra & Co., Satyen
Bros, Shiny Enterprise, Sinha Tools, Asia Trade Combines, Chemisynath, Harness Cable Connectory, IEE Engg. Enterprises
Pvt. Ltd., Imanes Pvt. Ltd., Protochem Industries, Saket Hardware Industries, Unique Engineers, Unique Mouldings Pvt. Ltd.,
Welfix Cables & Cords, Wirecraft, Aruna Industries, Ashiwini Tools & Components, Akshai Tools, Anjaneya Enterprises,
Bharath Press Components, Britestone Abrasives, Citizen Industrial works, Chamundi Heattreaters, Do All Do Well Engineers,
Essar CNC Tool Room, Essar Engineers, Goel Engineering Private Limited, Ideal Tools, Indo Tech Toolings Pvt. Ltd., Indu Tools
& Components Pvt. Ltd., Karnataka Tufftriding & Engg. Works P. Ltd., Kashi Precision Componenet, M.R.Engineers,
Metafin Industries, Multi Spot, Mags Fabricators, Nivetha Enterprises, Pretorhatics, Primex Plastics (P) Ltd., Qualitech Industries,
Rajas Engineering, R.B.Precision Components (P) Ltd., Saify Industries, Sri Durga Industries, Springs India, Satabdhe Engineering
works, S.B.Enterprises , Southern Metal Finishers, shalini Enterprises, Samura Industries, Sri Srinivas Industries, S.M.Systems
Pvt. Ltd., Trio Tooling aids, Thermo Theaters, Therelek Engineers Pvt. Ltd., Uma Engg. Works, Uni Carb, Universal Grinders,
Vimala Mass Finishing Pvt. Ltd., Venkatashwara Stels & Springs(I) Pvt. Ltd., Akshayay Packing Industries, Auto Plast., Avnet
Asia Pvt. Ltd., Good Will Plastics, Mini Nuts, Manish Enterprises, Micron Precision Plastics, PMS Vecera, Set Right Electrical
Works, Suma Industrial Communication, Sudha Battery Works, Vainyaka Industrial Enterprises, Sun Beam Tools.
42
IFB
IFB INDUSTRIES LTD.
Balance Sheet Abstract and Company's General Business Profile
I. Registration Details
Registration No. 2 9 6 3 7 State Code
Balance Sheet Date 3 1 0 3 0 6
Date Month Year
II. Capital Raised During the Year (Amount in Rs. Thousands)

Public Issue N I L Rights Issue N I L
Bonus Issue N I L Private Placement 1 8 2 9 5 0
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities 7 3 5 0 1 8 7 Total Assets 7 3 5 0 1 8 7
Sources of Funds
Paid up Capital O
2 5 8 5 9 Reserves & Surplus 1 6 4 7 8 4 7
Secured Loans 4 2 6 9 1 l|7 Unsecured Loans 4 6 2 0 1 4
Application of Funds
Net Fixed Assets 1 0 9 4 5 3 4 Investments 2
Net Current Assets 1 4 5 0 1 5 Misc. Expenditure N I L
Accumulated Losses 5 4 6 5 2 8 8
IV. Performance of Company (Amount in Rs. Thousands)

Turnover 6 5 2 3 8 Total Expenditure 2 7 8 3 5 3 9
+
Profit before" Tax Profit after Tax / 1 3 7 9 8 8
(Please tick appropriate box + for profit, -for loss)
Earnings per Share 0 8 Dividend Rate % N I L
V. Generic Name of Three Principal Products/Services of Company (as per monetary terms)
Item Code No. (ITC Code) 4 5 0 1 1 0 0
Product Description W A S H I N G M A C H I N E
Product Description F I N E B L A N K E D C O M P O N E N T S
Product Description M A C H I N E T O O L S
Product Description M I C R o W A V E O V E N
43
NOTES
IFli
IFB INDUSTRIES LTD.
Regd. Office: 14, TARATOLLA ROAD, KOLKATA-700 088
Name, Address & Folio NoVDPID No. of Shareholder(s) ATTENDANCE SLIP

30TH ANNUAL GENERAL MEETING
on 30th August, 2006 at 11:00 a.m. at
Eastern Zonal Cultural Centre at Bidhannagar,
IA-290, Sector - III, Bidhannagar, Salt Lake
Kolkata-700 091
A member/proxy wishing to attend the Meeting must complete this Slip before coming to the Meeting and hand it
over at the entrance.
If you intend to appoint a proxy, please complete the Proxy Form below and deposit it at the Company's Registered
Office, at least 48 hours before the Meeting.
Please bring your copy of the Annual Report to the Meeting.
I record my presence at the
30th Annual General Meeting
Name of Proxy in BLOCK LETTERS (if the Proxy attends Signature of Member/Proxy
instead of the member)
IF1I
IFB INDUSTRIES LTD.
Regd. Office: 14, TARATOLLA ROAD, KOLKATA-700 088
PROXY FORM
I/We
of
being a member/members of the above named Company hereby appoint .'.
Mr./Mrs./Miss
of
or failing him/her
of ,
or failing him/her
as my/our proxy to vote for me/us on my/our behalf at the 30th Annual General Meeting of the Company to be
held on the 30th day of August, 2006 and at any adjournment thereof.
Signed this day of 2006.
Regd. Folio/DPID/BEN No.:
No. of Shares: Re. l/-
Revenue
Signature
0
Stamp
Note : This instrument of Proxy shall be deposited at the Registered Office of the Company not less than 48
(FOURTY EIGHT) hours before the time of holding the Meeting.
BOOK POST
If undelivered, please return to:

IFB INDUSTRIES LTD.
Plot No. IND-5, Sector—I I
East Kolkata Township 8
Kolkata-700107 z

Ind000031333 2006 A 00 L 00 00

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IFB INDUSTRIES LIMITED

BOARD OF DIRECTORS REGISTERED OFFICE

Directors' Report, 5-11

Corporate Governance Report 12 - 18

AUDITORS Ten Years' Highlights 19

Deloitte Haskins & Sells Auditors' Report 20 - 23

Profit & Loss Account 25

Cash Flow Statement 26

REGISTRAR AND Schedules to Balance Sheet and

Registered. Office : By Order of the Board

iii) The members are requested to

a) notify immediately any change in their address to the Company;

b) bring their copy of the Annual Report to the meeting;

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.

The Board recommends the passing of this Special Resolution.

None of the Directors is interested/concerned in the resolution.

Registered. Office : By Order of the Board

DIRECTORS' REPORT to the Shareholders

ANNEXURE TO DIRECTORS REPORT OF IFB INDUSTRIES LTD.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

REPORT ON CORPORATE GOVERNANCE

Company's Philosophy on Corporate Governance

Director Category Number of other Membership of

Mr. Bijon Nag Executive Chirman 4 -

Attendance of Directors at Board Meetings and Annual General Meeting:

Directors Sitting Fees * Salary & Perquisites Com. Total

* Includes fees for Committee Meetings.

Name Designation Category Profession Committee

Shareholders / Investors Grievance Commitee:

The members of the Committee at present are as follows:

Annual General Meeting Date Time Venue No. of Special

CEO / CFO Certification:

(f) Stock Market Data:

Price Vs. Nifty

i) Shareholding Pattern as on 31st March 2006

Shareholder Category Number of shares held % of shareholding

1. Promoters Group 6930776 43.80

(k) Outstanding GDRs/ADRs or

(k) Plant Location • 14, Taratolla Road, Kolkata - 700 088

(m) Investor Correspondence • Corporate Office:

On behalf of the Board

AUDITORS' REPORT on Corporate Governance

To the Members of IFB Industries Limited

For Deliotte Haskins & Sells

10 Years' Highlights (Rs. million)

Retained earnings 227 - - - _ _ _ _ _

ASSETS & LIABILITIES

AUDITORS' REPORT to the Members of IFB Industries Limited

6. In our opinion and to the best of our information and

ANNEXURE to the Auditors' Report

For DELOITTE HASKINS & SELLS

IFB INDUSTRIES LIMITED

BALANCE SHEET as at March 31 2006

Total 6,704,837 6,945,466

II. APPLICATION OF FUNDS

Less : Current Liabilities & Provisions

Net Current Assets 145,014 228,079

4. Profit and Loss Account 5,465,287 5,327,299

Total 6,704,837 6,945,466

NOTES TO FINANCIAL STATEMENTS 15

Schedules referred to above form an integral part of the Balance Sheet

In terms of our report of even date