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Directors Report of Digjam Ltd.

Mar 31, 2015

Dear Members,

We present herewith our Annual Report along with the Audited Accounts of the Company for the year ended March 31,2015.

FINANCIAL RESULTS (Rs. Lacs)

March 31,2015 March 31, 2014

Operations for the year resulted in Profit before Interest and Depreciation of 1,75.45 16,96.92

less: Finance Costs 12,35.34 12,79.78

less : Depreciation 4,03.85 3,88.35

(Loss)/Profit Before Tax (14,63.74) 28.79

less: Taxation - -

(Loss)/Profit After Tax (14,63.74) 28.79

add: Balance brought forward (83,08.95) (83,37.74)

less: Transition adjustments 46.14 -

leaving a Balance of (98,18.83) (83,08.95) which is carried forward

The Directors do not recommend any dividend.

REVIEW OF KEY BUSINESS MATTERS

The Indian macro-economic outlook is turning positive with a marked decline in inflation and a comfortable external position helped by positive government policies and fall in global crude oil prices. Changes adopted in GDP reporting based on an updated base year, wider coverage of goods and services and the inclusion of tax data showed a more robust economic performance than projected earlier, with initial estimates for 2014-15 showing growth accelerated to 7.4% as industry and service sectors expanded. GDP growth is projected at 7.8% in 2015-16 and expected to further rise to 8.2% by 2016-17. Government efforts towards regulating general inflation, a pro-investment attitude, improvement in fiscal and current account deficit, and movement on resolving structural bottlenecks are steps in the right direction. A global economic slowdown, barring some positive signs in U.S.A., does however create stresses and increases complexities in our economic environment. Challenges to economic prospects include possible rise in oil prices, uncertain monsoons, and slow revival of customer confidence.

Despite improving fundamentals in, and continuing strong potential, of our economy, the financial year was marked by generally weak customer sentiment. Globally, the woollen textiles market also continued to be depressed. Some traditionally strong U.S. businesses remained weak buyers due to their own reorganisation/ restructuring. Increasing competition from synthetic fabrics and cotton, and cheaper supplies from China, worked to influence customer preference in their favour. A marked shift to ready-mades is also impacting overall superior fabric demand at home. Wool and polyester prices were soft during the year aided by a relatively stable rupee.

In these overall conditions the Company could achieve a revenue from operations of Rs.132 crores against Rs.150 crores last year. Domestic volumes were marginally lower. Export sales were lower by 30% and were also impacted by the fall in the value of the Euro, rendering some exports uneconomic. Average sales realisations improved due to a richer wool product-mix. Costs and overheads were largely controlled and operational efficiencies improved. The Company continues to take steps to broaden its markets and take measures to improve operations, trim overheads and strengthen liquidity.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Sri C.L. Rathi, non-executive (non-independent) Director, retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

In terms of Section 149 and other applicable provisions of the Companies Act, 2013 (hereinafter "the Act"), at the Sixty-fourth Annual General Meeting held on September 5, 2014, Sri A.C. Mukherji and Sri G. Momen were appointed as Independent Directors to hold office until the third consecutive Annual General Meeting of the Company and Sri S. Ragothaman and Sri Bharat Anand were appointed as Independent Directors to hold office until the conclusion of the fifth consecutive Annual General Meeting of the Company i.e. until the conclusion of the Sixty-seventh/Sixty- ninth Annual General Meetings of the Company respectively. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013.

Upon completion of his term on December 31,2014, the Board on the recommendation of the Remuneration & Nominations Committee, re-appointed Sri C. Bhaskar as Managing Director & Chief Executive Officer, for a period of three years w.e.f January 1, 2015. The Members of the Company at the Extraordinary General Meeting of the Company held on March 25, 2015 approved the aforesaid appointment and remuneration payable to Sri Bhaskar as Managing Director & Chief Executive Officer. Sri Satish Shah was during the year designated as the Chief Financial Officer of the Company under the provisions of the Act.

During the year, five Board Meetings were held as per details in the annexed Corporate Governance Report.

SHARE CAPITAL

Pursuant to the approval of Members at the Extraordinary General Meeting held on March 25, 2015, the Company with a view to strengthen the long term resource base of the Company, including to meet working capital requirements, issued on Private Placement basis under Section 42 and other applicable provisions of the Act, 10,00,000 - 8% Non-Convertible Redeemable Preference Shares of Rs. 100/- each for cash at par against which 5,00,000 - 8% Non-Convertible Redeemable Preference Shares of Rs. 100/- each aggregating to Rs. 5 Crores were allotted in the first tranche before the year end. The funds received have been utilised for the aforesaid purpose. The said shares are redeemable at par at the end of 10 years from the date of allotment viz. March 27, 2015 or earlier at the option of the Company.

STATUTORY INFORMATION AND OTHER MATTERS

Information as per the requirements of the Act, our report on Corporate Governance alongwith the Auditors'' Certificate on Compliance and the Managements'' Discussion & Analysis Report form part of this report and are annexed hereto.

The extract of the Annual Return in Form MGT-9 is attached herewith.

The Board has, on the recommendation of the Remuneration & Nominations Committee, framed a Policy for appointment and remuneration of Directors and Senior Managerial Personnel as well as criteria for determining independence and other relevant matters (policy and criteria annexed herewith). Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board carried out annual evaluation of its performance, and of individual Directors (including independent) as well as the evaluation of its Audit, Remuneration and Nominations, and Stakeholders Relationship Committees. The concerned Director did not participate in the meeting while being evaluated. A questionnaire was circulated to all the Directors. The Remuneration and Nominations Committee also evaluated the performance of every Director. The evaluation of the Chairman of the Board and the non-independent Directors was also carried out at the separate meeting of the Independent Directors.

The information on Conservation of Energy, Technology absorption, foreign exchange earnings and outgo is annexed hereto.

The Company has a system of periodical review of business risks. The Audit Committee and the Board are informed about the risks identified, assessment thereof and minimization procedures and identification of elements of risks which in the opinion of the Board may threaten existence of the Company.

The Company has an internal control system commensurate with its size of operations. The internal audit function is carried out by an external agency which report to the Chairman of the Audit Committee. During the course of internal audit, the efficacy and adequacy of internal control systems of the Company is also evaluated. Based on the reports, corrective actions are taken and the controls strengthened.

The Company has no subsidiary, joint venture or associate company. The Company has not invited/accepted any Fixed Deposits under Chapter V of the Act and there are none outstanding on March 31,2015. The Company has not granted any loan or issued any guarantee or made any investment to which the provisions of Section 186 of the Act apply.

All transactions with related parties during the year were in the ordinary course of business on an arm''s length basis. There are no such material transactions entered into by the Company which may have a potential conflict of interest with that of the Company and to which Section 188(1) of the Act applies and thus, disclosure in Form AOC-2 is not required to be annexed. In accordance with the provisions of the Act and Clause 49 of the Listing Agreement, all Related Party Transactions are placed before the Audit Committee for approval or for omnibus approval as necessary. The statement of all such transactions entered into is placed before the said Committee for their review. The Policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website at the link http://digjam.co.in/pdf/RPTpolicy.pdf

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

The Audit Committee constituted by the Company meets the requirement of Section 177 of the Act and Clause 49 of the Listing Agreement; details of its composition are furnished in the Corporate Governance Report. There was no instance during the year where the Board had not accepted any recommendation of the Audit Committee.

The Company has a vigil mechanism for Directors and employees to report genuine concerns in accordance with the Whistle Blower Policy; no employee is denied access to the Audit Committee in this regard. The said Policy provides for safeguards through Protected Disclosures against victimization of persons who use such mechanism, and is displayed on the Company''s website. The details of the Whistle Blower Policy are also annexed herewith.

The Company had, before the Act came into force, already constituted a committee on Corporate Social Responsibility (CSR), the details of which are furnished in the Corporate Governance Report. While the statutory requirements on spending are not applicable to the Company in view of loss/inadequate profit, small steps have always been taken by the Company for social and inclusive development in its local area; however given the relatively small size and geographical spread, it has not been practical to yet undertake any significant projects beyond these. The CSR Policy of the Company is annexed herewith.

Information required pursuant to Section 197 of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is annexed.

The Company has set up a Committee to look into the complaints under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and no complaint relating to sexual harassment at work place has been received during the year.

The Managing Director & Chief Executive Officer and the Chief Financial Officer have certified as per the requirements of Clause 49(IX) of the Listing Agreement which has been reviewed by the Audit Committee and taken on record by the Board. Having taken reasonable and bonafide care pursuant to Section 134(5) of the Act, the Directors indicate that (a) in the preparation of annual accounts, the applicable Accounting Standards had been followed alongwith proper explanations relating to material departures; (b) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for the year; (c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) the Directors have prepared the annual accounts on a going concern basis; (e) 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; and (f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS'' OBSERVATIONS

The observations of the Auditors regarding advances towards building are explained in the Note No. 12 to the Accounts; necessary legal steps have been initiated by the Company to get possession of the said building/recovery of amounts paid along with interest, and the advances are considered good. NSE had advised the Company, based on recommendation of the Qualified Audit Review Committee of SEBI, to suitably rectify the qualification in this regard and the Company had responded to the same. The matter is sub-judice and the arbitration is presently at the stage of final arguments; the Company continues to take appropriate steps based on professional/legal advice.

AUDITORS

M/s Deloitte Haskins & Sells, Chartered Accountants, had been appointed as the Statutory Auditors of the Company at the Sixty- fourth Annual General Meeting held on September 5, 2014 to hold office until the conclusion of the Sixty-seventh Annual General Meeting of the Company i.e. for a term of three years. As provided in Section 139 of the Act, the said appointment is being placed for ratification at the forthcoming Annual General Meeting.

The Company had appointed M/s N.D. Birla & Co., Cost Accountants, Ahmedabad, to audit the cost accounts of the Company for the year ended March 31,2014 and the Cost Audit Report for the said year had been e-filed in the XBRL format by the Cost Auditor on September 3, 2014, well within the due date. Further, the Board has, on the recommendation of the Audit Committee, appointed the said Cost Accountants for audit of cost records of the Company for the year ending March 31,2016. In terms of Section 148(3) of the Act, the remuneration payable to them is required to be approved at the forthcoming Annual General Meeting.

Pursuant to the provisions of Section 204 of the Act, the Company had appointed Sri Viral Sanghavi (Proprietor: Viral Sanghavi &

Associates), Practising Company Secretary, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is attached herewith.

ACKNOWLEDGEMENTS

We place on record our sincere appreciation of the valuable cooperation and support received at all times by the Company from its bankers, other stakeholders, concerned Government Departments, other authorities, its channel partners, employees and shareholders.

For and on behalf of the Board

New Delhi Sidharth Birla

May 30, 2015 Chairman


Mar 31, 2014

Dear Member,

We present herewith our Annual Report along with the Audited Accounts of the Company for the year ended March 31, 2014.

FINANCIAL RESULTS (Rs. Lacs)

March 31, 2014 March 31, 2013

Operations for the year resulted in an operating Profit before Interest and Depreciation of 14,68.89 5,11.95

add: Other Income 2,28.03 18,53.37

less: Finance Costs 12,79.78 14,57.97

less : Depreciation 3,88.35 4,62.84

Profit Before Tax 28.79 4,44.51

less: Taxation - -

Profit After Tax 28.79 4,44.51

add: Balance brought forward (83,37.74) (87,82.25)

leaving a Balance of (83,08.95) (83,37.74) which is carried forward

(Note: Other income in previous year includes gain of Rs.16,37.59 lacs from sale of certain surplus properties)

The Directors do not recommend any dividend.

REVIEW OF KEY BUSINESS MATTERS

The business environment remained very challenging as the Indian economy continued to underperform and GDP growth rate weakened to an estimated 4.8%, with yet greater weakness in the industrial sector, consumer durables and capital goods. Inflation remained on the higher side affecting interest rate policies. India remained somewhat vulnerable on the macroeconomic front, with significant current account and fiscal deficits depreciating the rupee. While steps taken by the Government narrowed CAD down to 2.2% of GDP, the economy remains constrained by slow growth, contracting manufacturing, weak investment and reduced private consumption. The deceleration of economic growth can be argued to have bottomed out, but return to growth of 8-9% could take longer depending on the speed and effectiveness of implementation of economic policies and measures. Global growth in 2014-15 is however expected to see a recovery from the period of recessions and weaknesses, with GDP growth going up to 3.3% from the 2.4% seen last year, with the advanced economies, particularly the US, leading the recovery. Growth in the Euro area has been hesitant. Although growth in developing countries was relatively weak, at an estimated 4.8 percent, it has been firming in recent months, partly reflecting the growth in high-income countries.

The global woollen textiles markets, particularly in Europe, remained depressed despite a mild improvement in global growth. The demand for woollen fabrics was also affected by competition from non-woollen materials and weather conditions in several markets in the latter part of the year. Mergers and corporate restructuring at major customers in the US also led to rescheduling of shipments and deferring of substantial orders. Improvement in the economy in general, particularly in the US, UK and Europe would augur well for exports of woollen fabrics.

Despite these overall depressed conditions, the Company''s achieved 11% higher sales at Rs.146 crores against Rs.132 crores last year, while volumes were 7.7% higher, reflecting higher realisation. Domestic volumes were 20% higher than last year but exports dropped by about 10%. Costs increased due to persistent inflation, increases in energy and fuel costs, and volatility in wool prices. The Company continues to take steps to broaden its markets and the year witnessed material progress in strengthening quality and development of new fabric structures and finishes, which have all been well received by the market. The Company continuously takes measures to improve operations, trim overheads and discretionary spend, and strengthen liquidity. The proceeds from disposal of a portion of property not affecting operations, which netted a gain of Rs. 16,38 lacs in the previous year was used to trim debts, thus lowering finance costs.

DIRECTORS

In terms of Section 149, 152 and any other applicable provisions of the Companies Act, 2013, effective from 1st April, 2014, Independent Directors are not to be included in the total number of directors of the Company for the purpose of determining the directors liable to retire by rotation. Accordingly, Smt. Meenakshi Bangur retires at the forthcoming Annual General Meeting and being eligible offers herself for re-appointment.

Sri A C Mukherjee retires by rotation at the forthcoming Annual General Meeting and being eligible offers himself for appointment as Independent Director of the Company in terms of Section 149 and other applicable provisions of the Companies Act, 2013.

Sri G. Momen, Sri S. Ragothaman and Sri Bharat Anand, Directors, whose present term of office is liable to determination by retirement of Directors by rotation under the applicable provisions of the Companies Act, 1956, being eligible, offer themselves for appointment, in terms of Section 149 and other applicable provisions of the Companies Act, 2013, as Independent Directors of the Company. Necessary notices have been received from members proposing them as candidates for the office of Directors of the Company.

STATUTORY INFORMATION AND OTHER MATTERS

Our report on Corporate Governance along with Auditors'' certificate on compliance, and the Managements'' Discussion & Analysis Report, as required under Clause 49 of the Listing Agreement, and information required under Section 217(1)(e) of the Companies Act, 1956 ("Act") read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, all form part of this report and are annexed hereto. Section 217(2A) of the Act is not applicable as there were no relevant employees during the year. The Company has not invited/accepted any Fixed Deposits and there are none outstanding on March 31, 2014. Relations with employees were cordial and we record our appreciation of the contribution made by employees during the year.

The Managing Director & Chief Executive Officer and the Chief Financial Officer have certified as per the requirements of Clause 49(V) of the Listing Agreement, which has been reviewed by the Audit Committee and taken on record by the Board. Having taken reasonable and bonafide care, pursuant to Section 217(2AA) of the Act, the Directors indicate that (i) in the preparation of the annual accounts the applicable accounting standards had been followed along with proper explanations relating to material departures; (ii) the directors had 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 at the end of the financial year and of the profit of the Company for the year; (iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the directors had prepared the annual accounts on a going concern basis.

Pursuant to The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 notified on December 9, 2013, the Company has set up a Committee to look into complaints under the said Act. The Company has not received any complaints relating to sexual harassment at work place from any woman employee during the year.

The Company, having regard to its size and scope, is generally compliant with relevant guidelines on Corporate Social Responsibility (CSR), even though not presently applicable to the Company. The Board has also constituted a committee to mentor and monitor CSR activities. Small steps have been always taken by the Company for social and inclusive development in its local area; however given the relatively small size and geographical spread it has not been practical to undertake directly any significant projects outside these. The Company has accordingly adopted a policy to support external bodies including relevant bodies, NGOs or Government Relief Funds selected by the Board, including through financial contribution to them, with greater participation in the areas of health and social welfare, efforts toward reducing child mortality, promotion of education & socially responsible behaviour, and employment enhancing vocational skills.

AUDITORS'' OBSERVATIONS

The observations of the Auditors regarding advances towards building are explained in the Note No. 12 to the Accounts; necessary legal steps have been initiated by the Company to get possession of the said building/recovery of amounts paid along with interest, and the advances are considered good. After close of the year, NSE has advised the Company, based on recommendation of the Qualified Audit Review Committee of SEBI, to suitably rectify the qualification in this regard. Considering that the matter is sub- judice, the Company will take appropriate steps based on professional/legal advice.

AUDITORS

The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, retire and, being eligible, offer themselves for re-election. They are proposed to be appointed to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of the third consecutive Annual General Meeting of the Company thereafter (i.e. for a term of three consecutive years).

The Company had appointed M/s N. D. Birla & Co., Cost Accountants, Ahmedabad to audit the cost accounts of the Company pursuant to Section 233B of the Act. The Cost Audit Report for the year ended March 31, 2013 had been e-filed in the XBRL format by the Cost Auditor on September 8, 2013, which is well within the due date of September 27, 2013.

ACKNOWLEDGEMENTS

We place on record our sincere appreciation of the valuable cooperation and support received at all times by the Company from its bankers, other stakeholders, concerned Government Departments, other authorities, its channel partners, employees and shareholders.



For and on behalf of the Board

New Delhi Sidharth Birla May 8, 2014 Chairman


Mar 31, 2013

TO THE SHAREHOLDERS

The present herewith our Annual Report along with the Audited Accounts of the Company for the year ended March 31, 2013.

REVIEW OF KEY BUSINESS MATTERS

Economic conditions remain subdued and stressed. The global economy is struggling to effectively recover. A number of developed economies are in various degrees of recession, and growth in many developing countries is affected by its spill-over. This is impacting consumer sentiments and demand. World growth is estimated at below 2.4% in 2012-13. Indian economic growth, decelerated to about 5%, the weakest in a decade, owing to unfavourable global and domestic factors and the slump has spread to both domestic consumption and exports. The manufacturing sector continued a sharp decline in growth to 2.7% in 2011-12 and 1.9% in 2012-13 (from 11.3% and 9.7% in 2009-10 and 2010-11 respectively). The outlook for retail goods remains uncertain at present.

Prevailing circumstances have taken a toll on the global woollen textiles industry as well, which is facing unprecedented headwinds. Domestic demand remained muted. Export markets, which form a significant part of the Company''s business were also weak. While the markets remained sluggish, orders across the industry are reported to be well below normal levels and accordingly inventories of fabrics have built up within the general pipeline. In this overall depressed scenario, the Company''s sales during the year at Rs. 131 Crores were about 25% lower than the Rs.174 Crores achieved in the previous year. Product costs have increased due to generally high inflation, finance cost, hikes in petroleum product prices, a firm Australian Dollar etc., all of which have a direct impact in reducing margins. Selling prices could not be raised in the above market scenario. Besides affecting the global market scenario, the Euro crisis has also resulted in strain on recoveries.

The Company has been taking measures to improve operations, trim costs and strengthen net worth and liquidity. The product range is being constantly broadened and the export base expanded particularly in Europe and Far Eastern countries. Towards the end of the year, the Company disposed off a portion of its properties where some housing is situated, and without affecting operational areas; the gain realised is being used to trim debt.

(Rs. Lacs)

FINANCIAL RESULTS March 31, 2013 March 31, 2012

Working for the year resulted in a Profit before Finance Cost of 23,65.32 16,95.64

less: Finance Cost 14,57.97 14,26.82

less: Depreciation 4,62.84 5,01.53

4,44.51 (2,32.71)

add: Exceptional Items - 3,60.07

Profit Before Tax 4,44.51 1,27.36

less: Taxation - -

Profit After Tax 4,44.51 1,27.36

add: Balance brought forward (87,82.25) (89,09.61)

leaving a Balance of (83,37.74) (87,82.25) which is carried forward

In view of the above, the Directors do not recommend any dividend.

SHARE CAPITAL

As reported last year, the Company had proposed a Scheme of Arrangement in terms of Section 391 to 393 of the Companies Act, 1956 to, inter alia, convert Preference Share Capital aggregating to Rs. 21.62 Crores into Equity Shares at a price of Rs. 14.50 per Equity Share (including premium of Rs. 4.50 per Share); the same had been unanimously approved by Shareholders at the Meeting convened by the Hon''ble High Court of Gujarat on April 11, 2012. Subsequently, on May 4, 2012, the Hon''ble High Court sanctioned the Scheme which came into effect on May 15, 2012. On June 4, 2012, the Company allotted 1,49,13,325 Equity Shares upon conversion of Preference Share Capital (which was consequently cancelled by adjusting Rs. 14.91 Crores towards Equity Capital and Rs. 6.71 Crores towards Securities Premium). These shares have been listed on the Stock Exchanges.

DIRECTORS

Sri Sidharth Birla, Chairman and Sri G. Momen retire from the Board by rotation and, being eligible, offer themselves for re-election.

STATUTORY INFORMATION AND OTHER MATTERS

Our report on Corporate Governance along with Auditors'' certificate on compliance, and the Managements'' Discussion & Analysis Report, as required under Clause 49 of the Listing Agreement, and information required under Section 217(1)(e) of the Companies Act, 1956 ("Act") read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, all form part of this report and are annexed hereto. Section 217(2A) of the Act is not applicable as there were no relevant employees during the year. The Company has not invited/accepted any Fixed Deposits and there are none outstanding on March 31, 2013. Relations with employees were cordial and we record our appreciation of the contribution made by employees during the year.

The Company has, after the close of the year, constituted a Corporate Social Responsibility (CSR) Committee to examine and recommend to the Board the CSR activities that can be undertaken by the Company within the limited means at its disposal.

The Managing Director & Chief Executive Officer has certified as per the requirements of Clause 49(V) of the Listing Agreement, which has been reviewed by the Audit Committee and taken on record by the Board. Having taken reasonable and bonafide care, pursuant to Section 217(2AA) of the Companies Act the Directors indicate that (i) in the preparation of the annual accounts the applicable accounting standards had been followed along with proper explanations relating to material departures; (ii) the directors had 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 at the end of the financial year and of the profit of the Company for the year; (iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) the directors had prepared the annual accounts on a going concern basis.

AUDITORS'' OBSERVATIONS

The observations of the Auditors regarding advances towards building are explained in Note No. 11 to the Accounts; necessary legal steps have been initiated by the Company to get possession of the said building/recovery of amounts paid alongwith interest, and the advances are considered good.

AUDITORS

The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, retire and, being eligible, offer themselves for re-election.

The Company had appointed M/s N.D. Birla & Co., Cost Accountants, Ahmedabad to audit the cost accounts of the Company pursuant to Section 233B of the Act. The Cost Audit Report for the year ended March 31, 2012 had been e-filed in the XBRL format by the Cost Auditor on January 28, 2013, which is well within the extended due date of February 28, 2013.

ACKNOWLEDGEMENTS

We place on record our sincere appreciation of the valuable cooperation and support received at all times by the Company from its bankers, other stakeholders, concerned Government Departments, other authorities, its channel partners, employees and shareholders.

For and on behalf of the Board

New Delhi Sidharth Birla

April 26, 2013 Chairman


Mar 31, 2012

The present herewith our Annual Report along with the Audited Accounts of the Company for the year ended March 31, 2012.

REVIEW OF KEY BUSINESS MATTERS

The world economy has been passing through stress. Financial turmoil in Europe has affected other countries. This contagion has pushed up borrowing costs and slowed growth in many parts of the world, and capital flows to developing countries have fallen. As a result, and despite a strengthening of activity in the United States and Japan, world trade has slowed down. Under this scenario, the forecast for global economic growth has been revised downward to about 2.5% in 2012. Indian economy also slowed down in 2011-12 mainly due to weak industrial growth. Inflation remained a major concern constraining RBI to pursue tight monetary policy.

In this generally depressed scenario the Company achieved about 10% growth in sales value which stood at Rs. 174 Crores for the year; we may recall that the previous financial year was restricted to a 6-month period due to the end of debt resolution and this period had coincided with the Company's peak season. Sales volume for the year was 55.7 lac mtrs against 29.3 lac mtrs in the previous period. The volumes and overall profitability were affected mainly due to recessionary conditions in export markets and higher raw material costs. The price of wool (the principal raw material) saw a highest level over the last 10 years in June 2011 which, coupled with sharp appreciation in importing currency i.e. Australian Dollar, pushed up input costs significantly. Under competitive pressures in markets, cost and finance cost increases could not be fully recovered by way of any enhanced pricing. We however report with some satisfaction that management was able to through proactive actions maintain pro rata operating profits and margins close to that of the previous period.

The management has taken measures as part of its continuous improvements to strengthen operations and viability. It has widened and improved the product range and price points in domestic market to enlarge the customer base. The brand visibility has enhanced particularly with emphasis on wider publicity at point of sale. Dealer network has been further strengthened. To achieve better sales realizations and margin, the Company emphasizes on premium qualities and has achieved good growth in this segment. Newer markets for exports are being explored to lessen impact of countries facing economic problems.

FINANCIAL RESULTS

(Rs. Lacs) March 31, 2012 March 31, 2011 (12 months) (6 months)

Working for the year resulted in an Operating Profit before Finance Cost of 16,95.64 8,93.83

less : Finance Cost 14,26.82 5,82.76

less : Deprecation 5,01.53 2,49.09

(2,32.71) 61.98

add : Exceptional Items 3,60.07 3,69.89

Profit Before Tax 1,27.36 4,31.87

less : Taxation - -

Profit After Tax 1,27.36 4,31.87

add : Balance brought forward (89,09.61) (93,41.48)

leaving a Balance of (87,82.25) (89,09.61) which is carried forward

In view of the above, the Directors do not recommend any dividend.

SHARE CAPITAL

The Company has issued Preference Capital to the extent of Rs. 21.62 Crores in earlier years to build net worth and support operations. It was considered by the Board to be of long term benefit to the Company if such capital be converted to permanent Equity Capital. The fair value of such conversion was independently worked out to be Rs. 14.50 per equity share (including premium of Rs. 4.50 per share) which was further seen to be advantageous to the Company. Under legal advise the appropriate method to achieve such conversion under existing laws and regulations was a fairly simple Scheme of Arrangement in terms of Section 391 to 393 of the Companies Act, 1956 ("Act") for the conversion of preference share capital into appropriate number of equity shares, subject to necessary approvals including sanction of the Hon'ble High Court of Gujarat. Equity Shareholders (alongwith the Preference Shareholders having voting rights in terms of Section 87 of the Act) unanimously approved the said Scheme at the meeting convened by the Hon'ble High Court on April 11, 2012. The Company has since filed petition with Hon'ble High Court of Gujarat to obtain the sanction of the Scheme.

DIRECTORS

Sri R.K. Choudhury and Dr. G. Goswami retire by rotation and, though eligible, have intimated their intention not to seek re-election due to personal reasons. The Board has accepted this with regret and decided not to fill up the vacancies arising out of their retirement and also places on record its sincere and deep appreciation of the valuable guidance and services rendered by Sri Choudhury and Dr.Goswami during their respective long tenures on the Board.

Sri C. Bhaskar was appointed as an Additional Director, classified as a Non-executive Director, on November 9, 2011.In accordance with the recommendations of the Remuneration and Nominations Committee the Board has also appointed Sri S. Ragothaman and Sri Bharat Anand as Additional Directors on April 27, 2012 and they would be classified as Independent Directors under applicable regulations. In terms of Article 140 of the Articles of Association all the Additional Directors hold office upto the date of the forthcoming Annual General Meeting; the Company has received notices u/s 257 of the Act proposing their appointment as Directors. Their details are included in the resolutions and the Directors recommend their appointment.

Sri C.L. Rathi, Managing Director, demits office on completion of his tenure on May 31, 2012, having served on the Board for about 14 years. We place on record our deep appreciation of the valuable services rendered by Sri Rathi during his long tenure, first as an executive of the Company and then on the Board. In order to benefit from his continuing association the Board has in accordance with recommendations of the Remuneration and Nominations Committee appointed Sri Rathi as Additional Director, to be classified as a Non-executive Director with effect from June 1, 2012 to hold office upto the forthcoming Annual General Meeting. The Company has received notice u/s 257 of the Act proposing his appointment, which is recommended by the Board.

The Board has unanimously approved appointment of Sri C. Bhaskar as Managing Director of the Company with effect from June 1, 2012, at remuneration approved by the Remuneration and Nominations Committee, in accordance with Section 316 of the Act subject to relevant approvals; the Resolution setting out the terms of his appointment is proposed for the forthcoming Annual General Meeting. Sri C.Bhaskar will, as permitted in law, continue to hold the office of Managing Director in Xpro India Limited.

STATUTORY INFORMATION AND OTHER MATTERS

Our report on Corporate Governance along with Auditors' certificate on compliance, and the Managements' Discussion & Analysis Report, both required under Clause 49 of the Listing Agreement, and information required under Section 217(1)(e) of the Companies Act, 1956 ("Act") read with Rule 2 of the Companies (Disclosure of Particulars in the

Report of Board of Directors) Rules 1988, all form part of this report and are annexed hereto. Section 217(2A) of the Act is not applicable as there were no relevant employees during the year. The Company has not invited/accepted any Fixed Deposits and there are none outstanding on March 31, 2012. Relations with employees were cordial and we record our appreciation of the contribution made by employees during the year.

The CEO (Managing Director) has certified as per the requirements of Clause 49(V) of the Listing Agreement, which has been reviewed by the Audit Committee and taken on record by the Board. Having taken reasonable and bonafide care, pursuant to Section 217(2AA) of the Companies Act the Directors indicate that (i) in the preparation of the annual accounts the applicable accounting standards had been followed along with proper explanations relating to material departures; (ii) the directors had 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 at the end of the financial year and of the profit of the Company for the year; (iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and (iv) the directors had prepared the annual accounts on a going concern basis.

AUDITORS' OBSERVATIONS

Observations of the Auditors, when read together with the relevant Notes to the Accounts and Accounting Policies, are self-explanatory.

AUDITORS

The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, retire and, being eligible, offer themselves for re-election.

The Company had appointed M/s N.D. Birla & Co., Cost Accountants, Ahmedabad to audit the cost accounts of the Company pursuant to Section 233B of the Act. The Cost Audit Report for the period ended March 31, 2011 due for filing by September 27, 2011 had been e-filed by the Cost Auditor on September 7, 2011.

ACKNOWLEDGEMENTS

We place on record our sincere appreciation of the valuable cooperation and support received at all times by the Company from its bankers, other stakeholders, concerned Government Departments, other authorities, its channel partners, employees and shareholders.

FOR AND ON BEHALF OF THE BOARD

New Delhi Sidharth Birla

April 27, 2012 Chairman


Mar 31, 2011

We present herewith our Report, along with the Audited Accounts of the Company, for the six-month period ended March 31, 2011.

REVIEW OF KEY BUSINESS MATTERS

Sales & Production both grew at an annualized rate close to 30% over the previous 18-month period. The growth was fuelled in part by positive market conditions and in part by management steps taken to increase market penetration. Strict financial discipline allowed the available resources to be used to best advantage possible, which in turn helped the Company achieve pre-interest profit margins in excess of 10%, after a considerable gap of time, which in turn led to a positive bottom line.

Management is continuously implementing initiatives towards further strengthening performance, which gives the Board sufficient confidence that, barring any unforeseen circumstances, the tempo of performance and improvements would continue.

It is heartening to note that these results were achieved despite the Company not having access to enhanced working capital banking limits while under Arcil process, and prices of wool (the principal raw material) surging by 20-50% during the period across various ranges taking them to 20-year-high levels. Sharp appreciation in the Australian Dollar (about 10% since August 2010) was also of concern since the Companys wool requirements are sourced from Australia.

Global and domestic economic cycles are here to stay but there were generally positive signs on all fronts through the year under review. Woollen worsted fabric demand was seen growing due to the global economic recovery. The management hopes to strengthen its performance on the domestic front, which is the most important segment for the Companys operations and brand exposure.

The balance loan outstanding to Asset Reconstruction Company (India) Ltd ("ARCIL") was repaid in full by the Company during the period and relevant securities released by ARCIL. Compared to its size and asset values, the Company now has very moderate levels of term debt.

FINANCIAL RESULTS

(Rs. Lacs) March 31, 2011 Sept. 30, 2010 (6 months) (18 months)

Working for the year yielded a Profit/(Loss) before Depreciation and Tax of 311.07 (892.39)

less: Depreciation 249.09 765.79

61.98 (1658.18)

add: Exceptional Items (net) 369.89 6048.61

Profit before Tax 431.87 4390.43

less: Taxation - (21.54)

Profit after Tax 431.87 4411.97

add: Balance brought forward (9341.48) (13753.45)

Leaving a Balance of (8909.61) (9341.48) which is carried forward

In view of the above, the Directors do not recommend any dividend.

SHARE CAPITAL

The Company on February 28, 2011 allotted to lenders (holders of ARCIL security receipts) 39,86,645 Equity Shares of Rs. 10/- each, at a price of Rs. 12.23 per share (including premium of Rs. 2.23) as per SEBI Regulations, and 1,24,329 - 8% Non-cumulative Redeemable Preference Shares of Rs. 10/- each at par to ARCIL, aggregating to Rs. 500 lacs, as part of settlement of dues reported in previous period and in accordance with approval of shareholders under Section 81(1A) of the Companies Act, 1956 in the Annual General Meeting held on January 18, 2011.

DIRECTORS

After a tenure of over 29 years, Sri S.K. Birla decided to step down from the Board and therefore its Chairmanship; his resignation was regretfully accepted effective October 28, 2010. The Directors placed on record their sincere appreciation for the valuable services rendered by Sri S.K. Birla and his unwavering support to the Company. In recognition of this leadership role of Sri S.K. Birla, the Board has conferred on him the title of "Chairman Emeritus". Sri Sidharth Birla has since been designated as the non-executive Chairman.

In the casual vacancy caused by the resignation of Sri S.K. Birla, Smt. Meenakshi Bangur, a post-graduate in business studies from London, was appointed as a Director (representing the Promoter group) to hold office upto the forthcoming Annual General Meeting. The Company has received notices under Section 257 of the Companies Act, 1956 proposing the appointment of Smt. Meenakshi Bangur as a Director. Sri A.C. Mukherji and Sri G. Momen, Directors, retire by rotation and being eligible offer themselves for re-election.

STATUTORY INFORMATION AND OTHER MATTERS

Our report on Corporate Governance along with the Auditors certificate on its compliance, and the Management Discussion & Analysis Report, both required under Clause 49 of the Listing Agreement, and information required under Section 217(1)(e) of the Companies Act, 1956 ("Act") read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 form part of this report and are annexed hereto. Section 217(2A) of the Act is not applicable as there were no relevant employees during the period. The Company has not invited/accepted any Fixed Deposits and there are none outstanding on March 31, 2011. Relations with employees were cordial and we record our appreciation of the contribution made by employees during the period.

As per our governance practices, managements statement on the integrity and fair presentation of financial statements is provided to the Board as an integral part of the accounts approval process. However, pursuant to Section 217(2AA) of the Companies Act, the Directors indicate that they have taken reasonable and bonafide care that :

a) in preparation of the annual accounts the applicable accounting standards had been followed and proper explanations relating to material departures, if any, have been furnished;

b) such accounting policies were selected and applied consistently and judgments and estimates that are reasonable and prudent made so as to give a true and fair view of the state of affairs of the Company at the end of the period and of the profit of the Company for the period;

c) proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with provisions of the Companies Act for safeguarding the Companys assets

and for preventing and detecting fraud and other irregularities; and

d) these accounts have been prepared on a Going Concern basis.

AUDITORS OBSERVATIONS

Observations of the Auditors, when read together with the relevant Notes to the Accounts and Accounting Policies, are self-explanatory.

AUDITORS

The Auditors, M/s Deloitte Haskins & Sells, Chartered Accountants, retire and, being eligible, offer themselves for re-election.

ACKNOWLEDGEMENTS

We place on record our sincere appreciation of the valuable cooperation and support received at all times by the Company from Arcil, its lenders, Bankers, other stakeholders, concerned Government Departments and other authorities, channel partners, employees and shareholders.

For and on behalf of the Board

Sidharth Birla Chairman

New Delhi April 28, 2011

 
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