DIRECTORS' REPORT

To,

The Shareholders,

1 Your Directors have pleasure in presenting the 26th Annual Report along with the Audited Financial statements of the Company for the financial year ended 31st March, 2015.

2 WORKING RESULTS:

During the year, the Company has earned profit of Rs. 38,12,023/- (Previous Year profit of Rs. 56,95,198/-).

3 DIVIDEND:

In view of past losses, Directors did not recommend any dividend for the equity shareholders for the financial year 2014-15.

4 DEPOSITS:

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

5 SHARE CAPITAL:

The Paid up capital of the Company is reduced during the period under review. The Company has received the sanction of the Hon'ble High Court, Mumbai vide it's the order dated 27th March, 2015 for reduction of Share Capital. Accordingly, the Share Capital of the Company has been reduced from Rs.3,48,00,760/- divided into 34,80,076 Equity Shares of Rs. 10/- each fully paid to Rs. 1,04,40,220/- divided in to 1,04,4,022 Equity Shares of Rs. 10/- each fully paid and to effect such reduction by setting off its accumulated losses in the Profit and Loss Account, of the Company as at March 31, 2014 and in the Annual Accounts of the Company for the year ended March 31, 2014.

Presently, the Share Capital of the Company is Rs. 1,04,40,220/- divided in to 1,04,4,022 Equity Shares of Rs. 10/-each

6 CORPORATE GOVERNANCE:

Your Company complies with the provisions laid down in Corporate Governance laws. It believes in and practices good corporate governance. The Company maintains transparency and also enhances corporate accountability. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, the following forms part of this Annual Report:

Declaration regarding compliance of Code of Conduct by Board Members and Senior Management Personnel-Management Discussion and Analysis; Report on the Corporate Governance; and Auditors' Certificate regarding compliance of conditions of Corporate Governance

7 DIRECTOR'S RESPONSIBILITY STATEMENT:

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

In the preparation of the annual accounts, the applicable accounting standards have been followed.

The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review.

The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

The directors have prepared the annual accounts on a going concern basis.

The directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

8 DIRECTORS AND KEY MANAGERIAL PERSONNEL:

The Board of Directors had appointed Mrs. Daksha N. Vora (DIN: 07163666) as an Additional Woman Director in the category of Non-Executive Director with effect from 31st March, 2015.

In accordance with the provisions of the Companies Act, 2013, Mr. Vikram A. Vora (DIN: 02454043) retire by rotation at the ensuing AGM and being eligible offers himself for reappointment.

Mr. Vikram A. Vora is not disqualified from being appointed as a Director as specified in terms of Section 164 of the Companies Act, 2013.

Brief profile of Mr. Vikram A. Vora who is to be re-appointed, as stipulated under Clause 49 of the Listing Agreement is furnished in the Notice of the ensuing AGM. The Board of Directors of your Company recommends the re-appointment of Mr. Vikram A. Vora at the ensuing AGM.

Ms. Bhavna K. Patel has been appointed as the Company Secretary of the Company with effect from 10th November, 2014. The Nomination and Remuneration Committee of the Board has recommended the said appointment to the Board of Directors.

Mrs. Bina K. Vora has been appointed as the Chief Financial Officer (CFO) of the Company with effect from 31st March 2015 in place of Mr. Kamlesh B. Mehta who has resigned as CFO of the Company. The Nomination and Remuneration Committee and the Audit Committee of the Board has recommended the said appointment to the Board of Directors.

The Company has received declarations pursuant to Section 149(7) from all the Independent Directors of the Company viz., Mr. Pradeep H. Joshi and Mr. Pradeep Kumar confirming that they meet the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchange.

9 MEETINGS:

Minimum four pre-scheduled Board meetings are held annually. Additional Board meetings are convened by giving appropriate notice to address the Company's specific needs. In case of business exigencies or urgency of matters, resolutions are passed by circulation. During the year Eight Board Meetings and five Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Listing Agreement.

10 AUDIT COMMITTEE:

The Audit Committee comprises of Mr. Pradeep Kumar who serves as the Chairman of the Committee and Mr. Pradeep Joshi and Mr. Avinash D. Vora as other members. The terms of reference of the Audit Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report. All the recommendations made by the Audit Committee during the year were accepted by the Board.

11 NOMINATION AND REMUNERATION COMMITTEE:

The composition and terms of reference of the Nomination and Remuneration Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.

12 STAKEHOLDERS' RELATIONSHIP COMMITTEE:

The composition and terms of reference of the Stakeholders' Relationship Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.

13 REMUNERATION POLICY:

The Board has, on the recommendation of the Nomination and Remuneration Committee adopted the Remuneration Policy, which inter-alia includes policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management Personnel and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

14 FAMILIARISATION PROGRAMME FOR BOARD MEMBERS:

The Company is required to conduct the Familiarisation Programme for Independent Directors (IDs) in terms of Clause 49(II)(B)(7) of the Listing Agreement, to familiarise them about the Company and their roles, rights, responsibilities in the Company. The Familiarisation Programme is stated in the Corporate Governance Report forming part of this Annual Report. The details of such Familiarisation Programme for directors may be referred to, at the website of the Company www.aviphoto.in  at http://www.aviphoto.in/index files/cc/Familiarization-Program-for-Independent-Directors.pdf

2.15 BOARD EVALUATION:

Pursuant to the provisions of Companies Act, 2013 and Clause 49 of the Listing Agreement, your Company has adopted the Remuneration Policy with comprehensive procedure on performance evaluation. Chairman of the Nomination and Remuneration Committee, who is an independent Director of the Board conducted a one-to-one session with each Director to understand their points of view on the parameters for performance evaluation.

A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations, ethics and compliances, financial reporting process and monitoring activities.

Performance parameters for the Board as a collective body, included parameters like qualification and diversity of Board members, method and criteria for selection of independent directors to ensure independence, availability, appropriateness, clarity of understanding on risk scenarios faced by the Company, existence, sufficiency and appropriateness of policy on dealing with potential conflicts of interest, involvement of Board members in long -term strategic planning etc.

Based on these criteria, the performance of the Board, various Board Committees, Chairman and Individual Directors (including Independent Directors) was found to be satisfactory.

Independent Directors has conducted its meeting without the participation of other Non-Independent Directors and members of management and reviewed the performance of Board, its Committee, Chairman and individual Directors. On the basis of the review by the Independent Directors, they hold unanimous opinion that the Non-Independent Directors, including the Chairman to the Board have abundant knowledge in their respective fields and are experts in their areas.

16 CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

During this period under the review not applicable to the Company. Hence, your Directors have not constituted the Corporate Social Responsibility (CSR) Committee.

17 INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman & Whole Time Director.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

18 AUDITORS:

At the Annual General Meeting held on September 26, 2014, S. Shah & Associates, Chartered Accountants, were appointed as statutory auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2018. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of S. Shah & Associates, Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

19 STATUTORY AUDITORS' OBSERVATIONS:

The notes on financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation or adverse remark.

20 SECRETARIAL AUDIT:

Pursuant to provisions of section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed Mr. Anish Gupta, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit report is annexed herewith as "Annexure A"

21 SECRETARIAL AUDITORS' OBSERVATIONS:

Reference point no. 1 of the Secretarial Auditor's Report your Company had reconstituted the Nomination and Remuneration Committee on 8 May 2015.

22 VIGIL MECHANISM:

The Company has a vigil mechanism named 'Breach of Integrity and Whistle Blower Policy' in terms of Section 177 of the Companies Act, 2013 and revised Clause 49 of the Listing Agreement to deal with instance of fraud and mismanagement, if any, and to report concerns about unethical behaviour, wrongful conduct and violation of the Company's code of conduct or ethics policy. The details of the said Policy is explained in the Corporate Governance Report and also posted on the website of the Company www.aviphoto.in  at http://www.aviphoto.in/index files/cc/Vigil-Mechanism-Policy.pdf.

23 RISK POLICY:

The Company understands that risk evaluation and risk mitigation is a function of the Board of the Company and the Board of Directors are fully committed to developing a sound system for identification and mitigation of applicable risks viz., systemic and non-systemic. The Board of Directors has approved a Risk Management Policy as per which the Company is in the process of identifying critical risks of various departments within the Company. Once identified, a sound mitigation system will be put in place. Further the Board is of the opinion that at present there are no material risks that may threaten the functioning of the Company.

24 EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT 9 forms part of this Annual Report and is annexed herewith and marked as "Annexure B".

25 CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis and are reviewed by the Audit Committee of the Board. During the year the Company has not entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. A Policy on related party transactions and dealing with related parties as approved by the Board has been posted on the Company's website www.aviphoto.in  at http://www.aviphoto.in/index files/cc/Related-Party-Transaction-Policy.pdf  as "Annexure C."

26 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The Company has not given any loans or guarantees covered under the provisions of section 186 of the Companies Act, 2013.

27 PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

Details of remuneration paid to employees as required by Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are not applicable, since the Company has not employed any person drawing salary of more than Rs. 60,00,000/- per annum or Rs. 5,00,000/- per month.

The full Annual Report including the aforesaid information is being sent to all shareholders of the Company through the prescribed mode and is available on the Company's website.

28 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

There were no significant material orders passed by the Regulators / Courts / Tribunals which would impact the going concern status of the Company and its future operations.

In respect to Capital Reduction of the Company, High Court, Bombay order was passed on 27th March, 2015. The Share capital of the Company has reduced from Rs.3,48,00,760/- divided into 34,80,076 Equity Shares of Rs. 10/-each fully paid to Rs. 1,04,40,220/- divided in to 1,04,4,022 Equity Shares of Rs. 10/- each.

29 DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:

The Company is committed to provide a safe & conducive work environment to its employees and has formulated 'Policy for Prevention of Sexual Harassment' to prohibit, prevent or deter any acts of sexual harassment at workplace and to provide the procedure for the redressal of complaints pertaining to sexual harassment, thereby providing a safe and healthy work environment. During the year under review, no case of sexual harassment was reported.

30 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION:

Your Company does not have any activity relating to conversion of energy or technology absorption.

31 FOREIGN EXCHANGE EARNINGS AND OUT-GO:

During the period under review there was no foreign exchange earnings or out flow.

32 SUBSIDIARY COMPANIES:

The Company does not have any subsidiary.

33 PREVENTION OF INSIDER TRADING:

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.

All Board Directors and the designated employees have confirmed compliance with the Code.

34 APPRECIATIONS:

Your Company and its Directors wish to extend their sincerest thanks to the Members of the Company, Bankers, State Government, Local Bodies, Customers, Suppliers, Executives, Staff and workers at all levels for their continuous co-operation and assistance.

By order of the Board of Directors

For AVI PHOTOCHEM LIMITED

Sd/-Avinash Vora

Chairman

(DIN No. 02454059)

Registered Office:

110, Manish Indl. Estate No. 4, Navghar Road, Vasai East, Thane- 401210.

Date:12th August,2015