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Directors Report of Cheviot Company Ltd.

Mar 31, 2013

The Directors have great pleasure in presenting the Annual Report and Audited Accounts of your Company for the year ended 31st March, 2013.

FINANCIAL RESULTS

Particulars For the year ended For the year ended 31st March, 2013 31st March, 2012

Operating results after charging depreciation and amortisation show a profit of 3,310.55 3,129.94

Add : Exceptional item - Indirect taxes for earlier years 73.01 213.13 {net of provision Rs. 105.16 (previous year Rs. Nil)}

Add : Other income 784.96 528.64

Profit before tax 4,168.52 3,871.71

From which have been deducted: Current tax 1,001.00 845.00

Tax for earlier years (net) (7.30) 30.78

Deferred tax 103.40 109.02

Profit after tax 3,071.42 2,886.91

Surplus as per last balance sheet 431.60 426.29

Making a total of 3,503.02 3,313.20

Which has been appropriated by the Directors as under:

Proposed dividend 676.69 586.46

Tax on proposed dividend 115.00 95.14

Transferred to SEZ re-investment reserve account 400.00

Transferred to general reserve 1,850.00 2,200.00

Balance surplus carried to balance sheet 461.33 431.60

3,503.02 3,313.20



DIVIDEND

Your Directors are pleased to recommend for your consideration payment of dividend of Rs. 15/- per ordinary share of the face value of Rs. 10/- each for the year ended 31st March, 2013.

OPERATIONS

Production, sales, profitability and earnings per share show under noted position during the year under review as compared to previous year:

Particulars For the year ended For the year ended 31st March, 2013 31st March, 2012

Production (in M. Tonnes) Sales (in M. Tonnes) 47,381 49,103

Total sales 28,604.82 29,144.50

Export sales (C.I.F. Value) 11,529.68 12,575.30

Operating profit 3,310.55 3,129.94

Other income 784.96 528.64

Profit before tax 4,168.52 3,871.71

Profit after tax 3,071.42 2,886.91

Earnings per share of face value of Rs. 10 (in 68.08

The year under review witnessed an acute shortage of workers and absenteeism as a result of which capacity could not be fully utilised and consequently, there was loss of production, being 46,650 M.T. during the year under review as compared to 48,518 M.T. during the previous year. Besides, export sales were greatly affected due to unfavourable conditions in overseas market. Accordingly, overall sales were lower both in terms of value and quantity.

It is, however, a matter of satisfaction that on account of planned procurement of raw materials and overall better margin, the operating profit was higher in comparison to previous year despite lower production and sales. Bottom line was also improved due to increase in other income mainly on account of profit on sale of investments. Thus, profit after tax was higher by Rs. 184.51 being Rs. 3071.42 for the year as compared to Rs. 2886.91 during previous year.

The Company''s export oriented unit at Falta Special Economic Zone has been continuing its operations at reduced capacity due to lower demand of Jute fabrics. Besides, the initiative taken by the Company to venture into export of jute shopping bag could not make much progress so far. Efforts are on to explore possibilities of manufacturing other items of jute fabrics in tune with requirements of international market as also to examine alternate ways and options to establish market for export of jute shopping bag.

CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance as required under clause 49 of the Listing Agreement with the BSE Limited. A separate report on Corporate Governance along with a certificate from the statutory auditors of the Company confirming the compliance with the conditions of Corporate Governance is set out in the Annexure which forms part of this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, it is hereby confirmed :

i. that in the preparation of annual accounts for the year ended 31st March, 2013, the applicable accounting standards have been followed and there are no material departures from the same;

ii. that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and of the profit of the Company for the year ended on that date;

iii. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the Directors have prepared the annual accounts on a going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information as required under sub section 1 (e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are provided in the Annexure forming part of this Report.

PARTICULARS OF EMPLOYEES

Particulars in terms of provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, in respect of the employees of the Company, are provided in the Annexure forming part of this Report.

DIRECTORS

In accordance with Article 97 of the Articles of Association of the Company, Mr. Parag Keshar Bhattacharjee, a non-executive director, retires from the Board by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment. Brief particulars of Mr. Bhattacharjee have been given in the Notice convening ensuing Annual General Meeting.

STATUTORY AUDITORS

M/s Jain & Co., Chartered Accountants, statutory auditors of the Company retires at the conclusion of the forthcoming Annual General Meeting and offer themselves for re-appointment. A certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The Audit Committee and the Board recommend the re-appointment of M/s Jain & Co., Chartered Accountants, as statutory auditors of the Company.

COST AUDITORS

As per directives of the Central Government and in pursuance to provisions of Section 233B of the Companies Act, 1956 read with rules framed thereunder, your Company is required to carry out an audit of the cost accounts maintained by the Company in respect of each financial year. Accordingly, the Central Government, in pursuance to Company''s application has approved the appointment of M/s D. Radhakrishnan & Co., Cost Accountants, to conduct the said cost audit for the financial year ended 31st March, 2013.

As per The Companies (Cost Audit Report) Rules, 2011, the due date for filing the cost audit report for the previous financial year ended 31st March, 2012 with the Central Government was extended till 28th February, 2013 and the said report was filed by the cost auditor on 27th February, 2013.

ACKNOWLEDGEMENT

The Directors take this opportunity to express deep sense of gratitude to the financial institutions, banks, government authorities, business associates, and all stakeholders for their continued support and faith reposed on the Company.

The Directors place on record their appreciation and acknowledge the commitment and contribution made by the employees at all levels.

For and on behalf of the Board

H.V.KANORIA

Chairman and Managing Director,

Kolkata, 14th May, 2013 Chief Executive Officer


Mar 31, 2012

The Directors have great pleasure in presenting the Annual Report and Audited Accounts of your Company for the year ended 31st March, 2012.

FINANCIALRESULTS

Particulars Year ended Year ended 31st March, 31st March 2012 2011

Operating results after charging depreciation and amortisation show a profit of 3,129.94 2,959.74

Add : Other income 741.77 862.31

Profit before tax 3,871.71 3,822.05

From which have been deducted :

Current tax 845.00 1,013.30

Tax for earlier years(net) 30.78 6.98

Deferred tax 109.02 (81.85)

Profit after tax 2,886.91 2,883.62

Surplus as per last balance sheet 426.29 371.84

Making a total of 3,313.20 3,255.46

Which has been appropriated by the Directors as under:

Proposed dividend 586.46 541.35

Tax on proposed dividend 95.14 87.82

Transferred to general reserve 2,200.00 2,200.00

Balance surplus carried to balance sheet 431.60 426.29

3,313.20 3255.46

DIVIDEND

Your Directors are pleased to recommend for your consideration payment of dividend of Rs 13/- per ordinary share of the face value of Rs 10/- each for the year ended 31st March, 2012.

OPERATIONS

Production, sales, profitability and earnings per share show under noted position during the year under review as compared to previous year:

Particulars Year ended Year ended

31st March,2012 31st March,2011

Production (in M.Tonnes) 48,518 47,769

Total sales 29,144.50 30,244.33

Export sales(C.I.F. Value) 12,575.30 17,887.07

Operating profit 3,129.94 2,959.74

Other income 741.77 862.31

Profit before tax 3,871.71 3,822.05

Profit after tax 2,886.91 2,883.62

Earnings per share off ace value of Rs10(in Rs) 63.99 63.92



Slump in export of jute yarn as reported last year continued throughout the year under review. It is heartening to report that by having adequate in-house infrastructure and full flexibility to cater to both domestic and overseas markets, your Company shifted its focus from manufacturing jute yarn to traditional jute products like sacking. It was precisely due to this flexibility in operational facilities that your Company, by operating in the domestic market was able to achieve satisfactory results during the year under review, despite declining exports and increase in costs of other inputs. Moreover, total sales for the year under review was higher in terms of quantity, albeit the same was decreased value wise mainly due to lower rate of sales realisation per M. Tonne of goods, triggered due to decrease in prices of rawjute as compared to previous year.

The operating profit was better in comparison to previous year due to operational efficiency and better margins. However, the bottom line was affected due to lower other income largely attributable to sale of investments. Accordingly, profit after tax was maintained almost around same level as that of last year.

The Company's Export Oriented Unit at Falta Special Economic Zone continue to operate at reduced scale due to lack of orders for industrial fabrics on account of recession in Europe. However, during the year under review, the Company has created required infrastructure at its Falta unit to venture into export of jute shopping bags, the work on which continues.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT a) Industry structure and developments

The compulsory packing at 100% for both food grains and sugar under Jute Packaging Materials (Compulsory use for Packing Commodities) Act, 1987 (JPMA) is presently valid up to 30.06.2012. However, the ongoing litigations to frustrate the provisions of JPMA are hurting the jute industry. It is expected that better sense will prevail and JPMA will be continued beyond the said period in the interest of large workforce engaged in the jute industry.

The demand of jute goods in domestic market was generally good. The year witnessed declining trend in prices of rawjute. However, export of jute yarn from India has declined and prices have become un-remunerative. The proposal of Government of India to resume Export Promotion Assistance Scheme (EMA) renamed as "Scheme to incentivise Social and Environment Compliance in the Jute Sector - For promotion of Exports" was welcomed by the Industry but the same is yet to be implemented. We once again urge the government to expedite resumption of EMA scheme in some form or other for promotion of exports.

Modernisation and development of infrastructure by availing government grants under the Jute Technology Mission is sine qua non for the Industry so as to manufacture cost effective quality products and meet the competition effectively.

b) Opportunities and Threats

Opportunities

- In the backdrop of rising global awareness to use more natural fiber products to keep the environment free from pollution, Government and Industry are making concerted efforts to promote the advantages of jute especially the environment friendly attributes in enhancing the diversified uses of these fibers;

- Considerable progress has been made in developing diversified jute products for various end uses like jute geo-textiles, floor coverings and many more projects are being taken up to develop products with promising market prospects and consumer needs.

Threats

- Competition from Bangladesh is increasing rapidly. Its low cost jute products are putting pressure on Indian jute goods in International market;

- Availability of comparatively cheaper alternate packaging materials.

c) Risks and concerns

Following are the major areas of risks and concerns for the Jute Industry :

- Continuous increase in wage cost by way of upward revision in dearness allowance as also increase in power cost due to frequent revision in power tariff by CESC;

- Improper agricultural strategy responsible for erosion in jute cultivation area;

- Reduced capacity utilisation due to shortage of workers;

- Unbridled rise in cost of major inputs.

d) Segment-wise or product-wise performance

The Company continues to operate through two business segments namely, a) Jute goods and b) Captive power generation. However, captive power generation is not a reportable segment in terms of the criteria laid down in paragraph 27 of the Accounting Standard - 17 as the revenue/results/assets of this segment are not more than the threshold limit of 10% of the total segment revenue/results/assets.

The following disclosure under Geographical segment has, however, been considered :

Year ended Year ended

31st March, 2012 31stMarch,2011

Particulars Within India Outside India Within India Outside India

Sales 16,569.20 12,575.30 12,357.26 17,887.07

Carrying amount of segment assets 33,438.06 - 31,461.57 -

Capital expenditure 858.66 - 741.87 -



e) Outlook

The Company is closely monitoring the international jute yarn market by remaining in touch with overseas customers and respond to the profitable offers. It is a matter of satisfaction that yarn market has presently started showing signs of improvement which is expected to revive export demands. Moreover, demand for jute goods in domestic market is expected to remain reasonably good. Rawjute prices are presently stable. However, movement in prices of raw jute would be governed by the size of the new crop for the season 2012-13, which depends on overall weather conditions. It is widely believed that rawjute prices will be higher than those of prevailing during later part of the previous year due to impact of enhancement in minimum support price of rawjute for the crop season 2012-13 by the Government.

The Company is steadfast in its endeavour to control costs in all possible areas and explore new areas where jute goods can be economically used. The outlook for the current year appears to be positive.

f) Internal control systems and their adequacy

The Company has an adequate system of internal control towards achieving optimum utilisation of resources, cost control, compliance with statutory requirements and safeguarding the assets from loss. The Audit Committee of the Board plays a significant role in the internal control systems and reviews the internal audit reports, financial performance of the Company and suggests improvements in internal control system, wherever required.

g) Discussion on financial performance with respect to operational performance

The accounts for the year under review have been prepared as per the requirements of the revised Schedule VI to the Companies Act, 1956. Accordingly, figures for the previous year have been regrouped/reclassified to conform to the current year's classification.

The following are the significant areas of financial performance during the year under review :

- Sale of jute goods was Rs 29,144.50 during the year as compared to Rs 30,244.33 during previous year. Decrease in value of sales was mainly due to lower sales realisation per M. Tonne of goods sold;

- Operating profit of the Company have increased by Rs 170.20 during the year from Rs 2,959.74 in previous year to Rs 3,129.94 during the year largely on account of better operational efficiency;

- Finance costs were lower at Rs 77.78 during the year as against Rs 95.86 in previous year. The reduction in finance costs was mainly due to availability of better liquidity;

- Inventories have decreased by Rs 304.87, being Rs 4,427.09 as at 31.03.2012 as against Rs 4,731.96 as at 31.03.2011, partly due to lower stocks of finished goods and work-in-progress and partly due to lower average rates of stocks.

- The Company has invested Rs 858.66 in fixed assets inclusive of capital advances given during the year.

h) Material developments in Human Resources/Industrial Relations front, including number of people employed Industrial relations remained cordial during the year under review.

As on 31.03.2012, the Company had 4321 employees on its rolls. The Company is continuing efforts to make its workforce competent to operate efficiently by providing in-house training and thereby enhance their knowledge and efficiency. Financial assistance and other benefits are provided to deserving staff under Company's various staff welfare schemes.

i) Cautionary statement

Statement made in this section of the report is based on the prevailing position in the jute industry and market conditions. Actual results might differ from what we perceive with regard to Company's outlook and performance.

CORPORATE GOVERNANCE

The report on corporate governance as required under clause 49 of the listing agreement with the Bombay Stock Exchange Limited has been included and forms part of the Annual Report. Besides, a certificate from the statutory auditors of the Company certifying compliance with the conditions of corporate governance is attached to this report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby confirmed :

i. that in the preparation of annual accounts for the year ended 31st March, 2012, the applicable accounting standards have been followed and there are no material departures from the same;

ii. that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the profit of the Company for the year ended on that date;

iii. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the Directors have prepared the annual accounts on a going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information as required to be disclosed under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are provided in annexure which forms part of this report.

PARTICULARS OF EMPLOYEES

Particulars in terms of provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended are set out in annexure to this report.

DIRECTORS

In accordance with Article 97 of the Articles of Association of the Company, Mr. Navin Nayar, a non executive director, retires from the Board by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

Mr. Nawal Kishore Kejriwal has been re-appointed as Wholetime Director of the Company by the Board on the terms and conditions as mentioned in the resolution which is being placed before you at the ensuing Annual General Meeting and your Directors recommend passing of the same.

Brief particulars of the said directors have been given in the Notice convening Annual General Meeting.

STATUTORY AUDITORS

The statutory auditors, M/s Jain & Co., Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and offer themselves for re-appointment. The Company has received a certificate from the said Auditors to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for re-appointment under the provisions of the said Act. The Audit Committee and the Board recommend the re-appointment of M/s Jain & Co., Chartered Accountants, as Auditors of the Company.

COSTAUDITORS

As per directives of the Central Government and in pursuance to provisions of Section 233B of the Companies Act, 1956 read with rules framed there under, your Company is required to carry out an audit of the cost accounts maintained by the Company in respect of each financial year. Accordingly, the Central Government, in pursuance to Company's application has approved the appointment of M/s D. Radhakrishnan & Co., Cost Accountants, to conduct the said cost audit for the financial year ended 31st March, 2012.

As per The Companies (Cost Audit Report) Rules, 2011, the due date for filing the cost audit report for the previous financial year ended 31st March, 2011 with the Central Government was 30th September, 2011 and the said report was filed by the cost auditor on 26th September, 2011.

ACKNOWLEDGEMENT

Your Directors express their gratitude for the whole hearted assistance and persistent co-operation received from the financial institutions, banks, government authorities, customers, suppliers and members of the Company.

The Directors place on record their sincere appreciation for the continuous support and sustained efforts put in by the employees at all levels through their hard work and sheer dedication.

For and on behalf of the Board

H. V. KANORIA

Chairman and Managing Director;

Kolkata, 30th May, 2012 Chief Executive Officer


Mar 31, 2011

The Directors have pleasure in presenting their Annual Report and Audited Accounts of the Company for the year ended 31st March, 2011.

(Amount in Rs. Lakhs) FINANCIAL RESULTS

Particulars Year ended Year ended

31st March 2011 31st March 2010

Operating results after charging depreciation show a profit of 2,999.13 1,307.38

Add: Other Income 825.30 745.00

Resulting in profit before tax and exceptional item 3,824.43 2,052.38

Add : Exceptional item :

Depreciation for earlier years written back - 59.02

Profit before tax 3,824.43 2,111.40

From which have been deducted:

Provision for current tax 1,015.00 505.68

Provision for deferred tax (81.85) (38.51)

Tax for earlier years (net) 7.66 3.25

Profit after tax 2,883.62 1,640.98

Profit brought forward from last account 371.84 351.70

Making a total of 3,255.46 1,992.68

Which has been appropriated by the directors as under:

Proposed dividend 541.35 360.90

Corporate dividend tax 87.82 59.94

Transfer to general reserve 2,200.00 1,200.00

Surplus carried to reserves & surplus 426.29 371.84

3,255.46 1,992.68

DIVIDEND

Your Directors are pleased to recommend for your consideration payment of dividend of Rs. 121- per ordinary share of the face value of Rs. 10/- each for the year ended 31 st March, 2011.

OPERATIONS

Production, sales, profitability and earnings per share show under noted position during the year under review as compared to previous year:

(Amount in Rs. Lakhs)

Particulars 2010-11 2009-10

Production (in M. Tonnes) 47,769 35,397

Total sales 30,244.33 17,189.02

Export sales (C.I.F. value) 17,887.07 8,288.56

Operating profit 2,999.13 1,307.38

Other income 825.30 745.00

Profit before tax 3,824.43 2,111.40

Profit after tax 2,883.62 1,640.98

Earnings per share of face value of RS.10/- (in Rs.) 63.92 36.38

Production during the year under review was 47769 M.Tonnes as compared to 35397 M.Tonnes during the previous year when the working was severely affected due to 62 days long industry wide strike.

The increase in profitability is attributed to higher production and sales coupled with better sales realisation mainly on account of steep increase in jute yarn selling prices triggered by bumper overseas demand during first half of the year under review.

The euphoria of aforesaid favourable overseas market conditions started waning during second half of the year and the yarn market condition became tough and competitive resulting in decrease in overall demand and fall in its selling prices. In the wake of overall market scenario, your Company as a conscious policy shifted its focus to manufacture and sale more sacking products, as it was more profitable to operate in domestic market.

It is a matter of satisfaction that your Company has created adequate in-house infrastructure to cater to both domestic and overseas markets with full flexibility.

CORPORATE GOVERNANCE DISCLOSURE

The report on corporate governance as required under clause 49 of the listing agreement with the stock exchange along with a certificate from the statutory auditors certifying compliance with the conditions of corporate governance are attached to this report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your directors make the following statement to the best of their knowledge and belief that:

i. in the preparation of annual accounts for the year ended 31st March, 2011, the applicable accounting standards have been followed and there are no material departures from the same;

ii. they have made judgement and estimates that are reasonable and prudent and have selected such accounting policies and applied them consistently to give true and fair view of the state of affairs of the Company for the year ended 31st March, 2011 and of the profit of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis.

PARTICULARS OF CONSERVATION OF ENERGY ETC.

Particulars in terms of sub-section(1 )(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, are set out in annexure to this report.

PARTICULARS OF EMPLOYEES

Information as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in annexure forming part of this report.

DIRECTORS

Under Article 97 of the Articles of Association of the Company, Mr. P. K. Khaitan, a Non-executive director, retires from the Board by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Brief particulars of Mr. Khaitan have been given in the Notice convening Annual General Meeting.

AUDITORS

The statutory auditors, Messers Jain & Co., Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and offer themselves for re-appointment. The Company has received a certificate from the said Auditors to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1 B) of the Companies Act, 1956. The audit committee and the Board recommends the re-appointment of M/s Jain & Co., Chartered Accountants, as auditors of the Company.

Pursuant to provisions of Section 233B of the Companies Act, 1956, Messers D. Radhakrishnan & Co., Cost Accountants, have been appointed, subject to requisite approval of the Central Government, to conduct an audit of the Cost Accounts maintained by the Company for the year ending 31st March, 2012, as per directives of the Central Government.

ACKNOWLEDGEMENT

The Directors express their appreciation for assistance and co-operation received from Export Import Bank of India, State Bank of India, Axis Bank Ltd., customers, vendors and shareholders of the Company.

The Directors also wish to place on record their appreciation and acknowledge the commitment and dedication made by the employees at all levels.

On behalf of the Board

H.V. KANORIA

Chairman and Managing Director,

Kolkata, 12th May, 2011 Chief Executive Officer


Mar 31, 2010

The Directors are pleased to present their Annual Report and Audited Accounts of the Company for the year ended 31st March, 2010.

Amount in Rs. Lakhs FINANCIAL RESULTS Year ended March 31 2010 2009 Operating results after charging depreciation show a profit of 1307.38 2259.50 Add: Other lncome/(Loss) 745.00 (374.19) Resulting in profit before tax andl exceptional Item 2052.38 1885.31 Add : Exceptional item : Depreciation for earlier years written back 59.02 - Profit before taxation 2111.40 1885.31 From which have been deducted : Provision for taxation 505.68 608.10 Provision for deferred taxation (38.51) (13.30) Provision for Fringe benefit fax - 8.50 Taxation for earlier years (net) 3.25 84.45 Profit after taxation 1640.98 1197.56 Balance brought forward from previous year 351.70 370.82 Making a total of 1992.68 1568.38 Which has been appropriated by the Directors as under: Proposed dividend 360.90 270.68 Tax on distributed profits 59.94 46.00 Transfer to General Reserve 1200.00 900.00 Balance to be carried forward 371.84 351.70 1992.68 1568.38

DIVIDEND

The Directors are pleased to recommend for your consideration payment of dividend of Rs. 8/- per ordinary share of the face

value of Rs. 10/- each for the year ended 31st March, 2010.

OPERATIONS

Production, sales, profitability and earnings per share show under noted position during the year under review as compared to previous year:

(Rs. in Lakhs) Current year Previous year Production (in M. Tonnes) 35397 42874 Total Sales 17189.02 18669.18 Export Sales (C.I.F. Value) 8288.56 11306.60 Operating Profit 1307.38 2259.50 Other Income/(Loss) 745.00 (374.19) Profit before Taxation 2111.40 1885.31 Profit after Taxation 1640.98 1197.56 Earnings per share of face value of Rs.10/- (Rs.) 36.38 26.55

Slump in export on account of severe recession as reported last year continued for most part of the year under review. The Company, due to inadequate inhouse infrastructure to manufacture traditional jute products like sacking to cater to domestic demands, was forced to manufacture exportable goods which were sold in the overseas markets at unremunerative prices. Besides, the Jute Industry witnessed 62 days long strike from 14.12.2009 to 13.02.2010 which not only resulted in loss of production but also led to steep increase in labour cost following Tripartite Settlement. Moreover, the unprecedented high price of raw jute further pushed the cost of production.

Consequent to adverse impact of above factors, the operating profit during the year under review was severely affected, being Rs. 1307.38 lakhs for the year as against Rs. 2259.50 lakhs during previous year.

Profit under the head of other income is attributable to sale of investments in better capital market scenario as compared to last year and interest income.

CORPORATE GOVERNANCE DISCLOSURE

In compliance with the requirement of clause 49 of the Listing Agreement with the Stock Exchange, a separate report on the Corporate Governance along with a certificate from the statutory auditors on its compliance is set out in the Annexure, which forms part of this report. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors make the following statement to the best of their

knowledge and belief that:

i. in the preparation of annual accounts, the Company has followed all the applicable accounting standards for the year under review;

ii. they have made judgement and estimates that are reasonable and prudent and have selected such accounting policies and applied them consistently, unless specifically stated to be otherwise, to give true and fair view of the state of affairs of the Company for the year ended 31st March, 2010 and of the profit of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis.

PARTICULARS OF CONSERVATION OF ENERGY ETC.

The information required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, are given in Annexure which forms part of this report.

PARTICULARS OF EMPLOYEES

The particulars as required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, are given in Annexure forming part of this report.

DIRECTORS

In accordance with Article 97 of the Articles of Association of the Company, Mr. S. Dhandhania, a Non Executive Director, retires from the Board by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting.

Mr. H.V. Kanoria has been re-appointed as Chairman and Managing Director of the Company by the Board on the terms and conditions as mentioned in the resolution which is being placed before you at the ensuing Annual General Meeting and your Directors recommend passing of the same.

Brief particulars of the said directors have been given in the Notice convening Annual General Meeting.

AUDITORS

The statutory auditors, Messers Jain & Co., Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and offer themselves for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1 B) of the Companies Act, 1956. The Board recommends that Messers Jain & Co., Chartered Accountants be appointed as Auditors of the Company and Board be authorised to fix their remuneration.

Messers D. Radhakrishnan & Co., Cost Accountants, have been appointed, subject to requisite approval of the Central Government, to conduct an audit of the Cost Accounts maintained by the Company for the year ending 31st March, 2011, as per directives of the Central Government.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank State Bank of India, Axis Bank Ltd., Export Import Bank of India, the customers

and the shareholders for their continued co-operation and support to the Company.

The Directors also express their deep sense of appreciation to employees at all levels for their dedicated service.

On behalf of the Board H.V. KANORIA Chairman and Managing Director, Kolkata, 7th May, 2010 Chief Executive Officer