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Directors Report of Gokak Textiles Ltd.

Mar 31, 2016

DIRECTORS’ REPORT

Dear Members,

Your Directors submit their Report and the Audited Financial Statements for the Financial Year (FY) ended March 31, 2016 covering a period of six months ending on the said date.

Financial Results

(Rs. In Crores)

Particulars

Standalone | Consolidated

FY 15-16

FY 14-15

FY 15-16

FY 14-15

Revenue from Operations and Other Income (Total Revenues)

105.59

331.59

106.11

336.54

Earnings before Interest, Depreciation & Taxation (EBIDT)

-9.32

-18.50

-7.66

-3.56

Profit / (Loss) after Interest and before Depreciation, Exceptional Items & Tax

-19.46

-40.45

-23.12

-35.93

Depreciation

3.55

7.59

4.07

8.63

Profit / (Loss) after Depreciation before Exceptional Items and Tax

-23.01

-48.04

-27.19

-44.56

Exceptional Items -Income/(Expense)

0.00

0.00

0.00

0.00

Profit / (Loss) before Tax (PBT)

-23.01

-48.04

-27.19

-44.56

Profit / (Loss) after Tax (PAT)

-23.86

-45.48

-25.23

-43.39

Minority Interest

-1.17

-4.64

Profit / (Loss) after Tax (PAT) and after Minority Interest

-24.06

-38.75

The Financial Results for FY 2015-16 are drawn for the six months period ended March 31, 2016. This change has been effected in order to align with the definition of financial year as per the provision of Section 2(41) of the Companies Act, 2013 and hence the previous year''s figures that covered a period of full twelve months, are not comparable. The Company will revert to a full twelve months accounting year from April 1, 2016 and thereafter.

The consolidated financial statements for the FY 2015-16 of the Company and its subsidiary company together with the Auditors Report thereon are attached.

Shifting of Registered Office

During the year under review the Registered Office of the Company was shifted from No. 24, 29th Main, BTM Layout II Stage, Bangalore - 560 076 to #1, 2nd Floor Ideal Homes, near Jayanna Circle, 12th Cross, Rajarajeshwari Nagar, Bangalore- 560 098 with effect from February 2, 2016.

Share Capital and Preference Shares

During the year under review, the Company has increased the Authorized Share Capital from Rs. 27 crores to Rs. 77 Crores.

The Paid up Share Capital of the Company has been increased from Rs. 26,49,93,080 to Rs. 46,49,93,080 pursuant to allotment of two crores (number of shares) Non-cumulative, Non-convertible, Redeemable Preference Shares of Rs.10 each aggregating to Rs.20 crores on a private placement basis to Shapoorji Pallonji and Company Private Limited, Promoters of the Company.

During the year under review, the Company has not issued any shares with differential voting rights or ''sweat equity shares'' and has not granted any stock options. As at March 31, 2016 none of the Directors of the Company hold shares in the Company.

Dividend and Transfer to Reserves

In view of the losses during the current year, the Board of Directors regret their inability to declare dividend.

No amount was transferred to the reserves during the year.

Material changes and commitments

During the year under review there was an illegal flash strike by certain workmen as a result there was a complete stoppage of production. The Company in the interest of safety of the employees/workmen, equipment, raw material and other properties of the Company had declared a lockout on March 17, 2016. The said lockout was lifted on May 13, 2016. The said strike and subsequent lockout has affected the financial position of the Company during the year under review.

Management Discussion and Analysis Report

Industry Structure and Development:

The Indian Textiles industry is extremely varied, with the hand-spun and hand-woven Textiles sectors at one end of the spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The decentralized power looms/ hosiery and knitting sector form the largest component of the Textiles sector. The close linkage of the Textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of Textiles make the Indian Textiles sector unique in comparison to the industries of other countries. The Indian Textile industry has the capacity to produce a wide variety of products suitable to different market segments, both within India and across the world.

India''s Textiles sector is one of the oldest industries in Indian economy dating back several centuries. It is the third largest producer and exporter in the world after China. Even today, Textiles sector is one of the largest contributors to India''s exports with approximately 11 per cent of total exports. The Textiles industry is also labour intensive and is one of the largest employers.

The future for the Indian Textile industry looks encouraging in the long term, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players. The organized apparel segment is expected to grow at a Compound Annual Growth Rate (CAGR) of more than 13 per cent over a 10-year period. Textile and apparel exports from India are estimated to increase US $ 65 billion by 2016-17.

There is optimism in the revival of the global economic outlook in the coming years though this view is not presently supported by economic fundamentals driven by higher economic growth in the advance economies and constrained by moderate growth in emerging markets.

The volume growth in the industry has been quiet modest over the past few years. Indian yarn production is at 7 million tons per annum and growing at around 3% per annum. Textile industry continues to be the second largest employer after agriculture, providing direct employment to 45-50 million people and indirect employment to another 50-60 million people. Labour forms a significant part of the cost of manufacture and hence the performance of this sector is very much dependent on various labour policies.

Opportunities and Threats:

The Textile Policy recently announced by Central Government will strengthen employment in the country. The policy is aimed at creating one crore jobs over the next 3 years, following labour friendly measures such as initiation of fixed term employment and enhancing duty drawback to push Textile and apparel exports. The policy aims to increase exports by $30 billion for which the Government will invest around Rs. 74,000 Crores in the Textiles & Apparels sector over the next three years. The new policy is expected to provide more employment in the garment sector and will give a boost to spinning mills. The recently announced Rs 6,000 crore Textiles package that envisages significant flexibility in labour laws is part of a larger policy for the sector which will boost exports and generate employment.

The Indian Textile industry has various opportunities like technical Textiles, product development and diversification, Foreign Direct Investment and brand recognition. Technical Textiles offer the opportunity to the Indian Textile industry to maintain the present current growth and flourish in near future.

China is the biggest threat to the Indian Textile industry in the global market. India also has a threat from low cost producing countries like Pakistan and Bangladesh which may hinder India''s exports demand in the future. The challenges of availability of Cotton, energy, and manpower at competitive price will continue to be a challenge. In view of this, your Company will continue to put extra efforts in augmenting the labour shortages and conserving the energy which will result into high utilization consequently giving rise to overall contributions.

The average prices for fibre are also likely to stay higher in FY 2017 as compared to the previous year, which will also support the growth in value of Textile exports. While the volume growth is positive, however yarn export volumes may also come under pressure due to the recent spurt in domestic cotton prices.

Segment-wise product-wise performance:

During the period the Company has developed several new products. In particular, compact yarn fine counts, for fine shirting and saree segments were successfully introduced in to the market. Specialty yarns like 100% polymultifold yarn for industrial application, PVA- Hygroyarn,Slub grindle fancy yarn, TFO dyed griddle yarn were introduced for home furnishing segment. The sale Dyed Yarn remains consistent. Export to the Middle East, Europe, South Africa has seen steady demand. Melange yarns for sportswear and undergarment manufacturing industry were introduced successfully and well accepted by the market.

Business outlook:

The Company has been taking all efforts to focus on the production and marketing of those products that have better demand from Domestic and International market.

Your company has initiated and exploring the possibilities to increase Yarn trading on a large scale in coming years.

Risks and Concerns:

Risk management process includes identification of risks, mitigation mechanism, measurement of risks along with key indicators and monitoring them on periodical basis. A Company-wide awareness of risk management policies and practices is being inculcated to minimize the adverse effect of risks on the operating results and the subject of management of risks is being approached in a planned and co-ordinated manner. The Company is accelerating this process by moving up the value chain by well researched and designed products. Company has taken several steps to introduce high performance fibres to move up in the value chain and in-house research in developing these products commercially

Internal Control Systems and their adequacy:

The Company has an Internal Control systems developed over years that ensures that all transactions are satisfactorily recorded and reported and all assets are protected against loss from an unauthorized use or otherwise. The internal control systems are supplemented by an internal audit system carried out by independent firms of Chartered Accountants and are periodically reviewed by the management. The findings of such Internal Audits are addressed through suitable corrective measures. The Audit Committee of the Board meets at regular intervals and advises on significant issues raised by, both, the Internal Auditors and the Statutory Auditors. The process of internal control, systems, statutory compliance, risk analysis, information technology and its management are woven together to provide a meaningful support to the management of the business. The system adopted, especially relating to internal control systems are adequate and commensurate with the nature of its business and size of its operations, though continues efforts are being made to strengthening the same.

M/s Kalyaniwalla & Mistry, the statutory auditors of the Company have audited the financial statements and has issued report inter alia on the internal controls relevant to preparation and fair presentation of the financial statements, which in their opinion is adequate and commensurate with the size of the business.

Human Resources / Industrial Relations

Material developments in Human Resources / Industrial Relations front:

Hiring talent for core industry like Textile is becoming more difficult and more particularly for spinning industry like our company. Therefore, the Company is focusing on nurturing and developing its human assets to upgrade skill and competency level through the process of training and provide them opportunity to take higher responsibilities. Performance appraisal scheme, reward and recognition policy, career plan, succession plan are some of the initiative undertaken by company for retaining and developing talent.

On the Industrial Relations front the company is passing through critical phase of industrial unrest. Since there are various facets to this localized dispute including social, political and cultural complexities, the company is trying its level best to reach to an amicable solution to the present dispute looking at the long term business objectives.

Deposits:

During the year under review, the 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.

Particulars of loans, guarantees or investments under Section 186

Particulars of Loans, Guarantees or Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Directors and Key Managerial Personnel

As per provisions of Section 152 (6) of the Companies Act, 2013. Mr. Ashok Barat (DIN 00492930) is due to retire by rotation at the ensuing Annual General Meeting and being eligible, seek re-appointment.

Mr. Sachin Kulkarni, Whole time Director, resigned from the services of the Company with effect from May 16, 2016

The Board condoles the sad demise of Mr. K. Ramananda Pai, Company Secretary of the Company on February 16, 2016.

The Board of Directors places on record their sincere appreciation for the valuable services rendered by Mr. Sachin Kulkarni and late Mr. K Ramananda Pai to the Board and the Company during their association with the Company.

Mr. Vikram V. Nagar (DIN 07526281) was appointed as an Additional Director and subject to the approval of the shareholders, the Whole time Finance Director with effect from May 27, 2016

Mr. Mohan Ketkar was appointed Company Secretary and Compliance Officer of the Company with effect from July 8, 2016.

Mr. Ramesh R. Patil (DIN 07568951) was appointed as an Additional Director and subject to the approval of the shareholders, Chief Executive Officer & Managing Director with effect from July 18, 2016.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed both under the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Independent Directors are familiar with their roles, rights and responsibilities in the Company.

The disclosures required pursuant to Regulation 36 (3) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 are given in the Notice of the Annual General Meeting, forming part of the Annual Report and disclosure pursuant to Schedule V, Part II, proviso of Section II B(iv)IV of the Companies Act, 2013 and Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the report.

Meetings of the Board

The Board met at least once in each quarter and 6 (six) meetings of Board were held during the year and the maximum time gap between two Board meetings did not exceed the time limit prescribed under the Companies Act, 2013. The details have been provided in the Corporate Governance Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually, as well as, the evaluation of the working of its Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee. In a separate meeting of Independent Directors, performance of Non-Independent Directors of the Board as a whole and the performance of the Chairman were evaluated.

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed and adopted a policy for selection and appo intent of Director, Senior Management and their remuneration. Remuneration Policy of the Company acts as a guideline for determining, inter alia, qualifications, positive attributes and independence of a Director, matters relating to the remuneration, appointment, removal, and evaluation of the performance of the Directors, Key Managerial Personnel and Senior Managerial personnel.

Nomination & Remuneration Policy is annexed as Annexure "III" to this Report.

Disclosure as required under section 197C of the Companies Act, 2013 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are Annexed as Annexure ''IV'' to this Report.

Details of Subsidiary/Joint Ventures/Associate Companies

Subsidiary Company : Gokak Power & Energy Limited (GPEL)

The Company is engaged in generation, transmission, distribution, trading of hydro-power and other renewal and non-renewal sources of energy. A significant portion of the power generation is used for captive consumption of the Holding Company.

The Audited Financial Statements for the Financial Year (FY) (six months) ended March 31, 2016 together with the Auditors'' Report along with the Report of Board of Directors of Gokak Power & Energy Ltd., for FY 2015-16 are attached separately to this Annual Report.

During the year under review (Six Months) the revenues from operation and other income were Rs. 3.38 Crores as against Rs. 19.11 Crores for FY 2014 -15 (Twelve Months). The EBIDTA for FY 2015-16 (Six Months) were Rs. 2.58 Crores as against Rs. 16.24 Crores for FY 2014 -15 (Twelve Months).

The Financial Statements for FY 2015-16 are drawn for the six months period ended March 31, 2016. This change has been effected in order to align with the definition of financial year as per the provision of Section 2(41) of the Companies Act, 2013 and hence the previous year''s figures that are for a twelve months period is not comparable. The Company will revert to a full twelve months accounting year from April 1, 2016 and thereafter.

While preparing Consolidated Financial Statements of the Company, the financials of GPEL have been consolidated; this forms part of the Annual Report.

Details of GPEL are set out in the statement in Form AOC-1, pursuant to Section 129 of the Companies Act, 2013 and are attached, herewith, as Annexure I to this Report.

The Company does not have any joint ventures/associate companies.

Auditors and Auditors Report

Statutory Auditors

The Shareholders of the Company at their 8th Annual General Meeting (AGM) held on December 29, 2014 had appointed Messrs. Kalyaniwalla & Mistry, Chartered Accountants as Statutory Auditors of the Company until the conclusion of 11th AGM to be held in the year 2017, subject to ratification of their appointment by the Shareholders at every AGM.

Messrs. Kalyaniwalla & Mistry have, under Section 139(1) of the Companies Act, 2013 and Rules framed there under furnished a certificate of their consent and eligibility for appointment.

The ratification of appointment of Auditors by the shareholders is sought at the ensuing AGM. The report of the Statutory Auditors forms part of the Annual Report.

The Auditors'' Report does not contain any qualification. Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments.

Cost Auditors

As per the requirements of Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014, the cost accounts of the Company are required to be audited by a Cost Accountant. The Board of Directors of the Company have, on the recommendation of the Audit Committee, appointed Messrs. A G Anikhindi & Co., Cost Accountants as Cost Auditors for the financial year 2015-16 on a remuneration of Rs. 3.00 lakhs plus out of pocket expenses. As required under the Companies Act, 2013 necessary resolution seeking Shareholders ratification for the remuneration to Cost Auditor is included in the Notice convening the 10th Annual General Meeting of the Company.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Kiran Desai & Associates, Company Secretaries, to conduct Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith as Annexure V.

Corporate Social Responsibility

The Board of Directors of the Company has constituted a Corporate Social Responsibility Committee in compliance with Section 135 of the Companies Act, 2013. The Company is not required to undertake any project under the provisions of the Companies Act, 2013. However the Company is spending on forestation, schools and hospitals, and continued to support causes of public utility both directly and indirectly in the field of education, medical relief, relief of poverty and promotion of sports and art. The Company is re-cycling all the process waste and manufacture quality yarns and other products for both local and export markets which greatly helped in reduction of carbon-emission. The Company has always strived to increase its output to input ratio which once again reduces carbon-emission.

Vigil Mechanism/ Whistle Blower Policy

The Company has Whistle Blower Policy/Vigil Mechanism to deal with instances of fraud and mismanagement, if any. The policy is also available on the website of the Company.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure VI forms part of this Report. Particulars of contracts or arrangements with related parties

All related party transactions that were entered into during the financial year were on arm''s length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with the Promoter, Directors, Key Managerial Personnel or the designated persons which may have a potential conflict with the interest of Company at large except power purchase from the subsidiary company for captive consumption and sale.

All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for transactions which are of a foreseen and repetitive nature and are incurred in the ordinary course of business. The transactions entered pursuant to the omnibus approval so granted are placed before the Audit Committee on a quarterly basis.

Form AOC-2 is annexed as Annexure "II" to this report, pursuant to Section 188 of the Companies Act,2013. The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website.

Corporate Governance

The guiding principle of the Code of Corporate Governance is ''harmony'' that is, balancing the need for transparency with need to protect the interest of the Company, balancing the need for empowerment at all levels with the need for accountability and interaction with all stakeholders including shareholders, employees, lenders and regulatory authorities. A detailed report on Corporate Governance is annexed as a part of this Annual Report. The Management Discussion and Analysis forms part of this report.

A Certificate on compliance of conditions of Corporate Governance issued by Kiran Desai & Associates, Company Secretaries is annexed to the Report on Corporate Governance.

Significant and Material Orders passed by the Regulators or Courts

There are no significant and material orders passed by the Regulators / Courts which would impact the going concern status and Company''s operations in future.

Statutory Compliances

The Company ensured compliances of applicable laws. However due to industrial strike and subsequent lockout between March 17, 2016 and May 13, 2016, that rendered access to records and data servers inaccessible during that period, a few statutory compliances during the said period of industrial unrest were compiled after lifting of the lockout.

Sexual Harassment of Women at Workplace (Prevention, Prohibition and

Redressal) Act, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace as per the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made there under for prevention, prohibition and redressal of complaints of sexual harassment at workplace.

During the year under review, no complaints on sexual harassment were received.

Particulars of Employees, Energy Conservation, Technology

Absorption and Foreign Exchange Earnings and Outgo

a. During the financial year 2015-16, the Company has not employed anyone with a remuneration in access of the limits specified in Rule V (2) of the Companies (Appointment and Remuneration of Managerial Personnel).

b. The details of Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are as follows:

(i)

the steps taken or impact on conservation of energy

i. Replacement of lower efficiency motors to higher efficiency motors.

ii. Electronic Ballast installed instead of copper Ballast.

iii. Optimization of cooling tower capacity in line with the Compressors.

iv. Optimum utilization of motors in Speed- Frame Machines.

v. Arresting of air leakages from Compressors.

(ii)

the steps taken by the company for utilizing alternate sources of energy

None

(iii)

the capital investment on energy conservation equipment''s

Nil

(b) Technology absorption :

(i)

the efforts made towards technology absorption

Nil

(ii)

the benefits derived like product improvement, cost reduction, product development or import substitution

Nil

(iii)

in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)

Nil

(a) the details of technology imported

Nil

(b) the year of import;

Nil

(c) whether the technology been fully absorbed

Nil

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof and future plan of action

Nil

(iv)

the expenditure incurred on Research and Development

Nil

Directors’ Responsibility Statement

Pursuant to the provisions of Section 134(3)(c) and 134 (5) of the

Companies Act, 2013 and based on the representations received from the

Operating Management, the Directors hereby confirm :-

a. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. that they 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 at the end of the financial year and of the profit or loss of the Company for that period;

c. that they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that they have prepared the annual accounts on a ''going concern'' basis

e. that they have 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. that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Cautionary Statement:

Statements in the Board''s Report and ''Management Discussion and Analysis'' describing the Company''s objectives, estimates, expectations or projections, outlook etc., may be ''forward looking statements'' within the meaning of the applicable securities laws and regulations. Actual results may differ materially from those expressed or implied due to factors beyond control. Important factors that could make a difference to the Company''s operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the government regulations, tax laws and other statutes and other incidental factors.

Acknowledgments

Yours Directors acknowledge and thank all stakeholders of the Company viz. customers, members, employees, dealers, vendors, banks and other business partners for their valuable sustained support and encouragement. Your Directors look forward to receiving similar support and encouragement from all stakeholders in the years ahead.

For and on behalf of the Board of Directors

Place : Mumbai, Ashok Barat

Date : July 8, 2016 Chairman

Registered Office :

# 1, 2nd Floor,Ideal Homes,

Near Jayanna Circle,

12th Cross Rajarajeshwari Nagar,

Bangalore- 560 098


Sep 30, 2015

The Directors submit their Report and the Audited Accounts for the financial year from 01.10.2014 to 30.09.2015 ended on 30th September, 2015.

1. Financial summary / highlights of Performance :

The summarized financial performance of the Company are set out below :

(Rs. In Crores) Standalone Consolidated

FY 14-15 FY 13-14 FY 14-15 FY 13-14

(a) Gross Income 331.59 344.13 336.54 350.13

(b) Less: Costs 350.09 345.44 340.09 335.68

(c) Balance (18.50) (1.31) (3.55) 14.45

(d) Less: Interest and Financial Charges (Net) 21.95 22.86 32.38 33.89

(e) Balance (40.45) (24.17) (35.93) (19.44)

(f) Less: Depreciation 7.59 10.35 8.63 11.96

(g) Loss after depreciation carried to Balance Sheet (48.04) (34.52) (44.56) (31.40)

(h) Balance (48.04) (34.52) (44.56) (31.40)

(i) Add: Net Tax Credit 2.56 0.39 1.17 2.28

(j) Loss for the year (45.48) (34.13) (43.39) (29.12)

(k) Less : Minority Interest - - (4.64) (3.32)

(l) Loss after tax (45.48) (34.13) (38.75) (25.80)

(m) Add : Balance brought forward (42.18) (8.05) (121.28) (95.48)

(n) Add : Carrying value of assets recognized (1.56) - (1.56) -

(o) Balance carried to Balance Sheet (89.22) (42.18) (161.59) (121.28)

2. Brief description of the Company's working during the year/State of Company's affair :

During the year under review, your Company has recorded gross income of Rs.331.59 Crores as compared to Rs.344.13 Crores in the previous year and the Net loss after tax of Rs.45.48 Crores as compared to Net Loss of Rs.34.13 Crores in the previous year. Your Company's performance review of the business /operations are covered in detail in the Management Discussion and Analysis Report, which is forming part of this Report.

The consolidated financial statements for the year ended 30th September, 2015 of the Company and its subsidiary together with the Auditors Report thereon are attached.

3. Change of Financial Year :

As per the provisions of Section 2(41) and other applicable provisions of the Companies Act, 2013 and Rules made there under, the Company has taken necessary steps to change the next financial year covering a period of 6 months i.e. from 1st October, 2015 to 31st March, 2016.

4. Share Capital and Preference Shares :

During the year under review, the Company has increased Authorized Share Capital from Rs.7 crores to Rs.27 Crores.

The Paid up Capital of the Company has been increased from Rs.6,49,93,080 to Rs.26,49,93,080 pursuant to allotment of 2 crores Non-cumulative, Non-convertible, Redeemable preference shares of Rs.10/- each amounting to Rs.20 crores to Messrs. Shapoorji Pallonji & Company Private Limited, Promoter, on Private Placement basis. None of the Directors of the Company hold equity or preference shares.

5. Dividend and Transfer to Reserve :

Due to the loss sustained by the Company and to preserve funds for the operations, no dividend for the year is proposed by the Board of Directors. No amount has been transferred to the Reserves.

6. Material changes and commitments :

There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

7. Subsidiary Company :

Your Company had formed a Subsidiary Company viz., 'Gokak Power & Energy Limited' on 17th January, 2012 and obtained a Certificate of Commencement of Business on 26th March, 2012. The main object of the subsidiary company is generation, transmission, distribution, trading of hydro power and other renewal and non-renewal sources of energy. The significant portion of power generation is used for captive consumption of Holding Company.

The Audited Statements of Accounts along with the Report of Board of Directors of Gokak Power & Energy Ltd., together with the Auditors' Report for the financial year from 01.10.2014 to 30.09.2015 are appended separately to this Annual Report.

While preparing Consolidated Financial Statements of the Company, financials of its Subsidiary company viz., Gokak Power & Energy Ltd., have been consolidated as per Accounting Standard AS-21 issued by The Institute of Chartered Accountants of India, which forms part of the Annual Report.

8. Knitwear Business :

Members are aware that the company has already taken permission from the shareholders as required under section 192 (a) of the Companies Act, 1956 and corresponding section 110 of the Companies Act, 2013 to sell the Knitwear business as a going concern. As the deal did not materialize with the reasonable price and the buyer, presently, the Company is reviving its knitwear business.

9. Management Discussion and Analysis Report :

9.1 Industry Structure and Development :

The past year has been a challenging year for the Textile Industry with lots of ups and downs. Inspire of the above, the industry has been able to maintain its steady performance during the year under review. The recoveries in US, European and Asian economies is good for the Industry and will boost the exports to these economies. Textile Industry has played a key role in the country's progress over the years and the situation is likely to gain momentum in the times ahead. The Industry continues to hold a dominant position in country's economic structure because of its huge contribution towards employment generation.

No industry is free from normal business risk and concerns. Indian Textile Industry continues to face stiff competition from China, Bangladesh, Sri Lanka and other emerging economies. The relative competitiveness of Industry is dependent upon the raw cotton prices, exchange rates and prevalent interest rates regime. The primary raw material for the manufacturing of yarn is cotton with share of around 60% of total cost. Cotton being an agriculture produce, its supply and quality are subject to forces of nature i.e. Monsoon. Any increase in the prices of raw cotton will make the things difficult for the Textile Industry resulting weak demand and thin margins. Thus availability of raw cotton at the reasonable prices is crucial for the spinning industry.

Raw material costs have fairly stabilized during the year under review and are expected to remain stable. The recovery of the textile industry seems to be round the corner as domestic demand is expected to pick up this year on account of improved economic sentiments. Inspire of the adverse market conditions prevailing in various businesses in which the Company operates, the overall performance of the Company during the year has improved compared to that of the previous year.

9.2 Opportunities and Treats :

There is confidence of a revival in global the economic outlook in the coming years though this view is not presently supported by economic fundamentals driven by higher economic growth in the advance economies and constrained by moderate growth in emerging markets.

A 'Make in India' campaign has been unveiled by the Prime Minister. The Make in India' scheme also puts in place the systems to address in a timely manner queries of potential investors. At present, the Government of India allows 100% Foreign Direct Investment (FDI) under the automatic route in the textile sector, subject to all applicable regulations and laws, which effectively backs the Make in India program for the textile and garment industry. Under the 'Make in India' initiative, investment opportunities for foreign companies and entrepreneurs are available across the entire value chain of synthetics, value-added and specialty fabrics, fabric processing set-ups for all kinds of natural and synthetic textiles, technical textiles, garments, and retail brands.

Changes in China's Textile Policy severely affected the country's export to that country. In spite of the above, we are of the firmed opinion that the future of the Textile Industry is quite promising. We hope that with the recoveries in economies of U.S.A and European Union will propel the growth of the Textile Industry. Ever growing retailing sector and increased purchasing power of both urban and rural people, are still present in the economy and will lead to the growth of the Industry. The shifting of orders from China to India, due to various favorable factors will also help the Industry to increase its global share.

9.3 Segment-wise product-wise performance :

Company has successfully introduced wider product range. In particular, fine counts for Home textile and Shirting segments were successfully introduced and performing good. Specialty yarns like fluorescent yarns, flame retardant yarns were introduced and are doing well. Dyed yarn sale is maintaining consistent position.

Export to Middle east, Europe, South Africa is been initiated and is been going consistently.

Melange yarns for Undergarment and Night ware manufacturing industry were introduced successfully and are consistently doing well.

9.4 Business outlook :

The Company is taking all efforts to improve the quality of production and new products which yields better returns.

Broadening the Product and Customer base is the Theme followed for Business growth. Through exports, Company is also increasing its presence in International market. Company is also seriously looking out for Joint Ventures for Business growth in the areas of home textiles. Company has successfully introduced many new raw materials like coolmax, thermolite, kermel apart from bamboo, modal, lyocel. It has been decided to introduce at least 1 product in every six months.

9.5. Risks and Concerns :

The company has drawn and put in place a comprehensive Risk Management Policy to asses and mitigate various risks. The Company wide awareness of risk management policies and practices is being inculcated to minimize the adverse effect of risks on the operating results and the subject of management of risks are being approached in a planned and co-ordinated manner. The acceptability of cotton as premium product can only enhance value perception of the yarn and knitwear we produce. The Company is accelerating this process by moving up the value chain by well researched and designed products. Company has taken several steps to introduce high performance fibers to move up in the value chain and in-house research in developing these products commercially has been a success.

9.6. Internal Control Systems and their adequacy :

The Company has a benefit of internal control systems developed over years which ensured that all transactions are satisfactorily recorded and reported and all assets are protected against loss from an unauthorized use or otherwise. The internal control systems are supplemented by an internal audit system carried out by independent firms of Chartered Accountants and a periodical review by the management. The Audit Committee of the Board meets at a regular interval and advises on significant issues raised by, both, the Internal Auditors and the Statutory Auditors. The process of internal control and systems, statutory compliance, risk analysis and its management and information technology are woven together to provide a meaningful support to the management process. The system adopted, especially relating to internal control systems are adequate and commensurate with the nature of its business and size of its operations, though continues efforts are being made to strengthening the same.

9.7 Material developments in Human Resources / Industrial Relations front :

In the past few years, as the job market has opened widely, the demand for talents has been continuously rising and continuous learning has therefore become inevitable. As such, the Company continued thrust on Human Asset Management and Development activity. In order to cope with this requirement for talent, apart from locating talents from outside market wherever necessary, the Company also focused on the activity of nurturing and developing its human capital from within, by the process of training and upgrading competence level.

On the Industrial Relations front, a cordial relationship has been maintained with the workmen and their Union and there has not been any loss of man hours in the manufacturing units. Your Company has put in place a series of HRD measures including appraisal of employees, recognition and reward for good work, developing career plans, training etc., In the context of the changing business scenario, professional competence and skills are being nurtured keeping the growth perspective in mind. Your Company has successfully introduced Internal Auditors for ISO 9001 from the workmen category which was a very successful effort put in by the Management. Apart from this, a team of workers have been formed as change agents who are very active in training other co-workers in many aspects of shop floor functioning. These efforts have started yielding intangible results and it is expected that continuation of such efforts will start yielding tangible results too, in future.

9.8 Cautionary Statement :

The statements in this report on 'Management Discussion and Analysis' describing the Company's objectives, estimates, expectations or projections, outlook etc., may constitute 'forward looking statements' within the meaning of the applicable securities laws and regulations. Actual results may differ from such expectations, projections etc., whether express or implied. These statements are based on certain assumptions and expectations of future events over which the Company has no direct control. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent developments, information or events.

10. Deposits :

During the year under review, your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and Rules framed there under and there is no outstanding deposits.

11. Directors and Key Managerial Personnel :

Mr.H.S.Bhaskar, Whole time Director, Mr.Govinda R Kadekar, Chief Financial Officer have resigned from the services of the Company with effect from 13th July, 2015 and 17th August, 2015 respectively. Mr.Sachin Kulkarni has been appointed as the Whole time Director with effect from 13th July, 2015

Mr.Vasant Sanzgiri (DIN 01757117) Director is due to retire by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment.

During the year, Ms.Zarine K Commissariat (DIN 07146151) was appointed as Non-independent Woman Director with effect from 31st March, 2015.

Particulars of Directors who are proposed to be appointed/re-appointed at the ensuing Annual General Meeting are furnished as a separate statement Annexed to the Explanatory Statement of the Notice.

None of the Directors are disqualified from being appointed as Directors as specified in terms of Section 164 of the Companies Act, 2013.

12. Meetings :

During the year, eight Board Meetings and four 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.

A calendar of Meetings is prepared and circulated in advance to the Directors.

13. Board Evaluation :

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit Committee, Nomination & Remuneration Committee.

14. Declaration by Independent Directors :

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement. Independent Directors are familiarized with their roles, rights and responsibilities in the Company through presentation made to them from time to time.

15. Remuneration Policy :

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. Remuneration Policy of the Company acts as a guidelines for determining, inter-alia, qualification, positive attributes and independence of a Director, matters relating to the remuneration, appointment, removal and evaluation of the performance of the Director, Key Managerial Personnel and Senior Management. The Remuneration Policy is stated in the Corporate Governance Report.

Disclosure under section 197 (12) of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure III to this Report.

16. Particulars of Employees :

Pursuant to the Section 136 of the Companies Act, 2013 and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 During the year 2014-15, the Company has not employed anyone with a remuneration of Rs.60 lakhs or more per annum.

17. Details of Subsidiary/Joint Ventures/Associate Companies :

Pursuant to sub-section (3) of section 129 of the Act, the statement containing the salient feature of the financial statement of a company's subsidiary viz., Gokak Power & Energy Limited has been disclosed in Form No. AOC-1 as Annexure I to this report.

The Company do not have joint ventures/associate companies. The Audited financial statements, Directors' Report of subsidiary company viz. Gokak Power & Energy Limited is attached and forming part of this Annual Report.

18. Auditors and Auditors Report :

During 8th Annual General Meeting held on 29th December, 2014, Messrs. Kalyaniwalla & Mistry Chartered Accountants had been appointed as Statutory Auditors up to the 11th Annual General Meeting to be held in the year 2017 subject to ratification of their appointment by the Members at every Annual General Meeting. The ratification of appointment of Auditors by the shareholders is sought at the ensuing Annual General Meeting.

The Auditors' Report does not contain any qualification. Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments.

19. Disclosure about Cost Audit :

As per the Cost Audit Orders, Cost Audit was not applicable to the Company's products/ business for the Financial Year 2014-15.

However, the Cost Audit is applicable for the year 2015-16. In terms of the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, Messrs. A G Anikhindi & Co., Cost Accountants have been appointed as Cost Auditors to conduct the audit of cost records of your company for the financial year 2015-16. The remuneration proposed to be paid to them requires ratification of the shareholders of the Company. In view of this, your ratification for payment of remuneration to Cost Auditors is being sought at the ensuing Annual General Meeting.

20. Secretarial Audit Report:

In terms of Section 204 of the Companies Act, 2013 and Rules made there under, the Company has appointed Mr.B S Srinivas, Practising Company Secretary to conduct Secretarial Audit of the Company. The report of the Secretarial Auditors in Form No. MR- 3 is enclosed as Annexure IV to this report. The report is self-explanatory and do not call for any further comments. There is no qualification in the Report.

21. Corporate Social Responsibility :

During the year 2013-14, as per the provisions of Section 135(1) of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has formed Corporate Social Responsibility Committee of the Directors comprising of Mr.Kaiwan Kalyaniwalla, Mr.Pradip N. Kapadia and Mr.Vasant Sanzgiri to formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII to the Companies Act, 2013. Due to net loss, your Company has not earmarked any amount on CSR Activities. However, since inception, the Company is spending on forestation, schools and hospitals, and continued to support causes of public utility both directly and indirectly in the field of education, medical relief, relief of poverty and promotion of sports and art. Your Company is re-cycling all the process waste and manufacture quality yarns and other products for both local and export markets which greatly helped in reduction of carbon-emission. Your Company has always strived to increase its output to input ratio which once again reduces carbon-emission.

22. Internal Audit & Controls :

The Company continues to engage Internal Auditors. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations.

23. Vigil Mechanism/ Whistle Blower Policy :

The Company has Whistle Blower Policy/Vigil Mechanism to deal with instances of fraud and mis-management, if any. The policy has been uploaded on the website of the Company at www.gokakmills.com under Investor Corner.

24. Risk Management Policy :

The company has drawn and put in place a comprehensive Risk Management Policy to asses and mitigate various risks. The details of which is covered under Management Development and Analysis Report forming part of this Report.

25. Extract of Annual Return :

As required pursuant to section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 is forming a part of this Annual Report as Annexure V .

26. Particulars of loans, guarantees or investments under section 186 of the Companies Act, 2013:

Particulars of Loans, Guarantees or Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

27. Particulars of contracts or arrangements with related parties :

All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. During the year under review, there were no materially significant related party transactions with the Promoter, Directors, Key Managerial Personnel or the Designated Persons which may have a potential conflict with the interest of Company at large except power purchase from the subsidiary company for captive consumption and sale.

All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for transactions which are of a foreseen and repetitive nature.

The particulars of contracts or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 has been disclosed in Form No. AOC-2 as Annexure II to this report.

The policy on dealing with Relate Party Transactions as approved by the Board is disclosed on the Company's website www.gokakmills.com. The related party transactions with details are furnished in the Notes forming a part of the accounts

28. Corporate Governance :

A detailed report on Corporate Governance is annexed as a part of this Annual Report and the Management Discussion and Analysis report forms part of this report.

A Certificate on compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement issued by Mr.B.S.Srinivas, Practicing Company Secretary is annexed to the Report on Corporate Governance.

29. Statutory Disclosures :

(a) There are no significant and material orders passed by the regulators or courts or tribunals which would impact the going concern status and Company's operations in future.

(b) Details in respect of adequacy of internal financial controls with reference to the Financial Statements are given in the Management3 Discussion and Analysis Report forming part of this Report.

30. Obligation of company under the Sexual harassment of women at workplace (prevention, prohibition and redressal) Act, 2013 :

The Company has adopted a policy as per the provisions of Sexual harassment of women at workplace (prevention, prohibition and redressal) Act, 2013 and Rules made there under for prevention, prohibition and redressal of complaints of sexual harassment at workplace. During the year under review, no complaints on sexual harassment were received.

32. Human Resources :

Your Company treats its "human resources" as one of its most important assets. Your Company continuously invest in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement.

33. Directors' Responsibility Statement :

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013 and based on the representations received from the operating management, the Directors hereby confirm :-

a. that in the preparation of the annual accounts for the financial year from 01.10.2014 to 30.09.2015, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

b. that they 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 at the end of the financial year and of the profit or loss of the Company for that period;

c. that they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that they have prepared the annual accounts for the financial year from 01.10.2014 to 30.09.2015 on a 'going concern' basis

e. that they have 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. that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

34. Listing of Shares :

The equity shares of the Company are listed on the Bombay Stock Exchange Limited, Mumbai. The Company has paid the Annual Listing Fees for the year 2015-2016 to the Stock Exchange.

35. Acknowledgements :

Your Company continues to occupy a place of respect amongst the many stakeholders it is associated with, most of all, our valued customers. The Directors commend the continued commitment and dedication of employees at all levels. The Directors also wish to acknowledge the co-operation extended by workmen and its Union. Your Directors thank all other stakeholders including Financial Institutions, Banks and suppliers of various goods and services for their valuable and sustained support, encouragement and look forward to receive similar support and encouragement in the years ahead.

Mumbai For and on behalf of the

23rd November, 2015. Board of Directors

Registered Office : Ashok Barat

No.24, 29th Main Chairman

BTM Layout II Stage

Bangalore - 560 076.


Sep 30, 2014

The Shareholders

The Directors submit their Report and the Audited Accounts for the financial year from 01.10.2013 to 30.09.2014 ended on 30th September, 2014.

1. FINANCIAL RESULTS :

The summarized financial performance of the Company are set out below :

(Rs. In Crores) For the year from For the year from 01.10.2013 to 01.04.2012 to 30.09.2014 ended 30.09.2013 ended September, 2014 September, 2013

(a) Gross Income 344.13 359.53

(b) Less: Costs 345.44 341.28

(c) Balance (1.31) 18.25

(d) Less: Interest and Financial Charges (Net) 22.86 20.74

(e) Balance (24.17) (2.49)

(f) Less: Depreciation 10.35 10.43

(g) Loss after depreciation carried to Balance Sheet (34.52) (12.92)

(h) Balance (34.52) (12.92)

(i) Add: Net Tax Credit 0.39 (1.60)

(j) Net Profit / loss for the year (34.13) (14.52)

(k) Add : Balance brought forward (8.05) 6.47

(l) Balance carried to Balance Sheet (42.18) (8.05)

During the year under review, your Company has recorded gross income of Rs.344,13 Crores and the Net loss after tax of Rs.34.13 Crores. Due to the loss sustained by the Company, no amount has been transferred to the General Reserve. Your Company''s performance review of the business /operations are covered in detail in the Management Discussion and Analysis Report, which is forming part of this Report.

The consolidated financial statements for the year ended 30th September, 2014 of the Company and its subsidiary together with the Auditors Report thereon are attached.

2. CHANGE OF FINANCIAL YEAR :

As per the provisions of Section 2(41) and other applicable provisions of the Companies Act, 2013 and Rules made thereunder, the Company has taken necessary steps to change the next financial year covering a period of 6 months i.e. from 1st October, 2014 to 31st March, 2015.

3. SHARE CAPITAL & DIVIDEND:

The Paid up Share Capital of the Company continued to remain at Rs.6.50 Crores. With a view to preserve funds for the operations, no dividend for the year is proposed by the Board of Directors.

4. FIXED DEPOSITS :

During the year under review, your Company has not accepted any fixed deposits from the public and there is no outstanding fixed deposits as on date.

5. SUBSIDARY COMPANY :

Your Company had formed a Subsidiary Company viz., ''Gokak Power & Energy Limited'' on 17th January, 2012 and obtained a Certificate of Commencement of Business on 26th March, 2012. The main object of the subsidiary company is generation, transmission, distribution, trading of hydro power and other renewal and non-renewal sources of energy. The significant portion of power generation is used for captive consumption.

The Audited Statements of Accounts along with the Report of Board of Directors of Gokak Power & Energy Ltd., together with the Auditors'' Report for the financial year from 01.10.2013 to 30.09.2014 are appended separately to this Annual Report.

While preparing Consolidated Financials Statements of the Company, financials of its Subsidiary company viz., Gokak Power & Energy Ltd., have been consolidated as per Accounting Standard AS-21 issued by The Institute of Chartered Accountants of India, which forms part of the Annual Report.

6. KNITWEAR BUSINESS :

Members are aware that the company has already taken permission from the shareholders as required under section 180(1) (a) of the Companies Act, 2013 to sell the Knitwear business as a going concern. Presently, company is negotiating with the prospective buyers. In case the deal is finalised, company expects to complete the transaction during the year.

8. DIRECTORS :

Directors wish to report that the Export Import Bank of India had withdrawn nomination of Ms.Rima Marphatia with effect from 10th January, 2014 and Mr.C.G.Shah resigned as a Director with effect from 30th September, 2014. The Board places on record, their appreciation for the services rendered and contribution made by Ms.Rima Marphatia and Mr.C.G.Shah during their tenure.

During the year under review, 7 (seven) Board meetings were held on 16.10.2013, 07.11.2013, 12.02.2014, 13.05.2014, 13.06.2014, 19.06.2014 and 13.08.2014. The gap between two consecutive Board Meetings was not more than 120 days.

In terms of the provisions of Section 149,152 and all other applicable provisions, if any, of the Companies Act, 2013, Mr.Shapoor P Mistry, Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Your directors recommend the re-appointment of Mr.Shapoor P. Mistry.

As per the provisions of Section 149,150,152 and other applicable provisions of the Companies Act, 2013 read with Schedule IV of the Act, it is proposed to appoint Mr.Pradip N. Kapadia, Mr.Kaiwan Kalyaniwalla and Mr.D.G.Prasad as Independent Directors of the Company for a term of 5

consecutive years with effect from 29th December, 2014 and Mr.R.N.Jha, as an Independent Director for a term of One year respectively. They shall not be liable to retire by rotation. They have given declarations to the Company in terms of provisions of Section 149(6) of the Companies Act, 2013 read with Schedule IV of the Act, and they meet the criteria of independence. The above said Directors were appointed as Independent Directors under Clause 49 of the Listing Agreement. However, the provisions of Section 149(6) read with Schedule IV requires them to be appointed as Independent Directors under the Companies Act, 2013. Accordingly, resolutions for approval of appointment of Independent Directors form part of the Notice of the Annual General Meeting.

Particulars of Directors, who are proposed to be appointed /re- appointed at the ensuing Annual General Meeting are furnished as a separate statement Annexed to the Explanatory Statement of the Notice.

None of the Directors are disqualified from being appointed as Directors as specified in terms of Section 164 of the Companies Act, 2013.

9. CORPORATE GOVERNANCE :

A detailed report on Corporate Governance is annexed as a part of this Annual Report and the Management Discussion and Analysis report forms part of this report.

A Certificate on compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing xAgreement issued by Mr.B.S.Srinivas, Practising Company Secretary is annexed to the Report on Corporate Governance.

10. RELATED PARTY TRANSCATIONS :

During the year under review, there were no contracts or arrangements or transactions entered into which are not at arm''s length basis. Your Company has formed a policy on dealing with Relate Party Transactions which has been disclosed on its website www.gokakmills.com

11. DIRECTORS RESPONSIBILITY STATEMENT :

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013 and based on the representations received from the operating management, the Directors hereby confirm that :–

a. in the preparation of the annual accounts for the financial year from 01.10.2013 to 30.09.2014, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

b. that they 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 at the end of the financial year and of the profit or loss of the Company for that period;

c. that they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that they have prepared the annual accounts for the financial year from 01.10.2013 to 30.09.2014 on a ''going concern'' basis:

e. that they have 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. that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

12. AUDITORS AND AUDIT REPORT :

Messrs. Kalyaniwalla & Mistry, Chartered Accountants, Statutory Auditors of the Company and Messrs. H. B. Murugesh & Company, Chartered Accountants, Branch Auditors of the Company to conduct audit of Forbes Campbell Knitwear Division of the Company are proposed to be re- appointed from the conclusion of this Annual General Meeting till the conclusion of 11th Annual General Meeting of the Company to be held in the year 2017, and they are eligible for re-appointment. Audit Committee have recommended re-appointment of Auditors. Your Directors commend their re-appointment subject to ratification of their appointment by the Members at every Annual General Meeting held after this Annual General Meeting. The Audit Report forms part of this Annual Report.

We draw the attention of Members to point no.10 of the Annexure to the Auditor''s Report. In this regard, we would like to mention that with the improved production, improved labour attendance and stable cotton price, the financial position may improve during the following year/s.

13. COST AUDITORS :

The Board of Directors have appointed Messrs. A G Anikhindi & Co., Cost Accountants, 1730, Rajarampuri, 6th Lane, Kolhapur-416008 Maharashtra State as Cost Auditors of the Company to conduct the cost audit for the financial year from 01.10.2013 to 30.09.2014. Necessary books of accounts and cost records as applicable to the Textiles activities of the Company have been maintained. In accordance with the Cost Audit (Report) Rules, 2011, the Cost Audit Report of the Company for the financial year ended 30th September, 2013 was filed in XBRL on 25th March, 2014 with the Ministry of Corporate Affairs. The Companies (Cost Records and Audit) Rules 2014 have not mandated the Company to have a Cost Audit for the current financial year and onwards.

14. CORPORATE SOCIAL RESPONSIBILITY :

During the year under review, as per the provisions of Section 135(1) of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has formed Corporate Social Responsibility Committee of the Directors comprising of Mr.Kaiwan Kalyaniwalla, Mr.Pradip N. Kapadia and Mr.Vasant Sanzgiri to formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII to the Companies Act, 2013. Due to net loss, your Company has not earmarked any amount on CSR Activities. However, since inception, the Company is spending on afforestation, schools and hospitals, and continued to support causes of public utility both directly and indirectly in the field of education, medical relief, relief of poverty and promotion of sports and art. Your Company is re-cycling all the process waste and manufacture quality yarns and other products for both local and export markets which greatly helped in reduction of carbon-emission.

Your Company has always strived to increase its output to input ratio which once again reduces carbon-emission.

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO :

In terms of 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. The particulars of conservation of energy, technology absorption, research and development, foreign exchange earnings and outgo are set out as an Annexure to this report.

16. PARTICULARS OF EMPLOYEES :

There are no such particulars to be furnished as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Amendment Rules, 2011. During the year 2013-14, the Company has not employed anyone with a remuneration of Rs.60 lakhs or more per annum.

17. LISTING OF SHARES :

The equity shares of the Company are listed on the Bombay Stock Exchange Ltd., Mumbai. The Company has paid Listing Fees to the Stock Exchange.

18. ACKNOWLEDGEMENT :

Your Company continues to occupy a place of respect amongst the many stakeholders it is associated with, most of all, our valued customers. The Directors commend the continued commitment and dedication of employees at all levels. The Directors also wish to acknowledge the co-operation extended by workmen and its Union. Your Directors thank all other stakeholders including Financial Institutions and suppliers of various goods and services for their valuable and sustained support, encouragement and look forward to receive similar support and encouragement in the years ahead.

For and on behalf of the Board of Directors

SHAPOOR P. MISTRY Chairman

Mumbai 17th November, 2014.

Registered Office : No.24, 29th Main BTM Layout II Stage Bangalore – 560 076.


Sep 30, 2013

To, The Shareholders

The Directors submit their Report and Audited Accounts of the Company for the financial year from 01.10.2012 to 30.09.2013 ended on 30th September, 2013. The previous year was of 18 months from 01.04.2011 to 30.09.2012. This aspect may be given due consideration while comparing figures.

1. FINANCIAL RESULTS:

The summarized financial results are set out below:

(Rs. in Crores)

(12 months) (18 months) 1st October 2012 to 1stApril 2011 to 30st September 2013 31st Sept. 2012

(a) Gross Income 359.53 484.22

(b) Less: Costs 341.28 490.29

(c) Balance 18.25 (6.07)

(d) Less: Interest and

Financial Charges (Net) 20.74 39.65

(e) Balance (2.49) 45.72

(f) Less: Depreciation 10.43 20.49

(g) Loss after depreciation carried

to Balance Sheet (12.92) (66.21)

(h) Add : Surplus on Slump Sale 0 94.06

(i) Less: Write-off of Fixed Assets 0 9.04

(j) Balance (12.92) 18.81

(k) Add: Net Tax Credit (1.60) 0.67

(l) Net Profit / loss for the year (14.52) 19.48

(m) Add : Balance brought forward 6.47 (13.02)

(n) Balance carried to Balance Sheet (8.05) 6.46

During the year under review, your Company has recorded gross income of Rs.359.53 Crores and the loss after tax of Rs. 14.52 Crores for the year under review

2. SHARE CAPITAL & DIVIDEND:

The Paid up Share Capital of the Company continued to remain at Rs.6.50 Crores. With a view to preserve funds for the operations, no dividend for the year is proposed by the Board of Directors.

3. SUBSIDARY COMPANY:

Your Company has formed a Subsidiary Company in the name and style of '' Gokak Power & Energy Limited'' on 17th January, 2012 and obtained a Certificate of Commencement of Business on 26th March, 2012. The main object of the subsidiary Company is generation, transmission, distribution, trading of hydro power and other renewal and non-renewal sources of energy. The whole of the hydro power business of the Company was transferred to the above said Subsidiary Company by way of Slump sale on 20.09.2012 for a consideration of Rs. 120 Crores and for which approval of the Shareholders has been obtained through postal ballot on 07.07.2012.

The financial information of the Subsidiary Company viz., Gokak Power & Energy Ltd. is set out in the statement pursuant to Section 212 of the Companies Act, 1956 forming part of this Annual Report. The Audited Statements of Accounts along with the Report of Board of Directors of Gokak Power & Energy Ltd., together with the Auditors'' Report for the financial year from 01.10.2012 to 30.09.2013 are appended.

While preparing Consolidated Financial Statements of the Company, financials of its Subsidiary company viz., Gokak Power & Energy Ltd., have been consolidated as per Accounting Standard AS-21 issued by The Institute of Chartered Accountants of India, which forms part of the Annual Report.

4. Knitwear Business :

The Members are aware that the Company is engaged, inter alia, in the Business of Knitwear (Apparels), the manufacturing unit of which is located at village Marihal, District Belgaum, Karnataka State. For the 12 months period ended 30th September, 2013, total sales of Knitwear was Rs.19.01 Crores i.e. 5.33% of total revenue from operations for that period. Results of this Business, in the recent years, have been negative and the Board of Directors of the Company, have come to a conclusion that from a long term perspective, it will be in the overall interest of the Company to exit and divest this Business.

It is therefore proposed to sell the Business. The sale/transfer, shall take place, on the basis of a best negotiated price, which will take into account, the past performance of the Business, the intrinsic value of the Business and its assets and the availability of a buyer.

Such sale/transfer will be done in total conformity with the provisions of all applicable laws and will be by the way of a Slump Sale of a going concern and on ''as is where is basis'' and on such terms and conditions, as the Board of Directors may thinks proper and beneficial to the Company.

The Business to be transferred shall include the related Land and Building on which the Knitwear manufacturing plant is located, this plant, technical knowhow, licenses and the benefits of all agreements, approvals and sanctions in relation to this Business as obtaining at the present. The Business to be transferred shall be the Business on the date of execution of the agreement between the parties.

Directors of the Company may be considered to be interested in the proposal to the extent of their respective shareholding in the Company.

The approval of the Members is sought vide Notice of Postal Ballot dated 16.10.2013 as required under the Section 192A of the Companies Act, 1956 and corresponding Section 110 of the Companies Act, 2013.

5. DIRECTORS :

Mr.Pradip N. Kapadia, Mr.C.G.Shah and Mr.Kaiwan Kalyaniwalla, Directors are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment.

Mr.H.S.Bhaskar, Executive Director & CEO is eligible for re- appointment as Whole time Director of the Company for a period of 3 years from 31.07.2013 to 30.07.2016.

The Board of Directors commends their re-appointment. Particulars of Directors, who are proposed to be re-appointed at the ensuing Annual General Meeting are furnished as a separate statement Annexed to the Explanatory Statement of the Notice and Report on Corporate Governance.

None of the Directors of the Company are disqualified from being appointed as Directors as specified in terms of Section 274(1)(g) of the Companies Act, 1956 corresponding Section 164 of the Companies Act, 2013.

7. CORPORATE GOVERNANCE :

A detailed report on Corporate Governance is annexed as a part of this Annual Report and Management Discussion and Analysis report forms a part of this report.

A Certificate on compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement issued by Mr.B.S.Srinivas, Practicing Company Secretary is annexed to the Report on Corporate Governance.

8. DIRECTORS RESPONSIBILITY STATEMENT :

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956 and corresponding Section 134 of the Companies Act, 2013,based on the representations received from the operating management, the Directors hereby confirm that :-

a. in the preparation of the annual accounts for the financial year from 01.10.2012 to 30.09.2013, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. they 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 at the end of the financial year and of the profit or loss of the Company for that period;

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

d. they have prepared the annual accounts for the financial year from 01.10.2012 to 30.09.2013 on a ''going concern'' basis.

9. AUDITORS AND AUDIT REPORT:

Messrs. Kalyaniwalla & Mistry, Chartered Accountants, Statutory Auditors of the Company and Messrs. H. B. Murugesh & Co., Chartered Accountants, Branch Auditors of the Company to conduct audit of Forbes Campbell Knitwear Division of the Company hold office from the conclusion of the previous Annual General Meeting until the conclusion of next Annual General Meeting and they are eligible for re- appointment. Audit Committee have recommended re- appointment of Auditors. Your Directors commend their re- appointment.

10. CORPORATE SOCIAL RESPONSIBILITY:

Established in 1887, the Company is one of the oldest and most modern textile plant in India. The Company is the pioneer in the field of hydro power generation in India. In order to run the Company''s production facility with hydro power, conserve and preserve the water, Company built a mini dam in the form of a weir at Dhupdal and at Gokak Falls. A unique plantation effort by the Company on rocky terrain led to the planting of over 2 million trees to protect the environment.

Since its inception, the Company has expanded many folds and we are happy to inform that 4th & 5th generation of workers continue to have gainful employment with the Company. The Company followed a policy of providing employment to the local population maj ority of whom belong to backward classes and minority communities.

Apart from providing the employment and nurturing the vegetation, Company runs several schools where more than 2800 students study. The uniqueness of the schools which are run by the Company is that, it provides education in Kannada, Marathi, Urdu and English as medium of instruction. The hospital, residential complex and several educational institutions provided by the Company are among the best in the region. The Company has also built and maintaining various places of worship catering to all the major religions. From time to time, Company has spent millions of rupees to upgrade the infrastructure.

Apart from forestation, schools and hospitals, the Company continued to support causes of public utility both directly and indirectly in the field of education, medical relief, relief of poverty and promotion of sports and art.

Since its inception, Company is re-cycling all the process waste and manufacture quality yarns and other products for both local and export markets which greatly helped in reduction of carbon-emission. Your Company has always strived to increase its output to input ratio which once again reduces carbon-emission.

11. COST AUDITORS :

The Central Government approved the appointment of Messrs. A G Anikhindi & Co., Cost Accountants, 1730, Rajarampuri, 6th Lane, Kolhapur-416008 Maharashtra State as Cost Auditors of the Company for the financial year from 01.10.2012 to 30.09.2013.

Necessary books of accounts and cost records as required under Section 209(1)(d) of the Companies Act, 1956 and corresponding Section 128 of the Companies Act, 2013, as applicable to the Textiles activities of the Company have been maintained.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO :

The particulars as prescribed under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are set out in the Annexure to this Report.

13. PARTICULARS OF EMPLOYEES :

There are no such particulars to be furnished as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Amendment Rules, 2011.

14. LISTING OF SHARES :

The equity shares of the Company are listed on the Bombay Stock Exchange Ltd., Mumbai. The Company has paid Listing Fees to the Stock Exchange.

15. ACKNOWLEDGEMENT:

Your Company continues to occupy a place of respect amongst the many stakeholders it is associated with, most of all, our valued customers. The Directors commend the continued commitment and dedication of employees at all levels. The Directors also wish to acknowledge the co-operation extended by workmen and its Union. Your Directors thank all other stakeholders including Financial Institutions and suppliers of various goods and services for their valuable and sustained support, encouragement and look forward to receive similar support and encouragement in the years ahead.

For and on behalf of the

Board of Directors

Mthumbai SHAPOOR P. MISTRY

7th November, 2013. .

Chairman

Registered Office :

No.24, 29th Main

BTM Layout II Stage

Bangalore - 560 076.


Sep 30, 2012

To, The Shareholders

The Directors submit their Report and Audited Accounts of the Company for the financial year from 01.04.2011 to 30.09.2012 ended on 30th September, 2012 covering 18 months period. The previous year was of 12 months from 01.04.2010 to 31.03.2011. This aspect may be given due consideration while comparing figures.

1. EXTENSION OF FINANCIAL YEAR OF THE COMPANY :

Your Company has extended the financial year 2011-12, covering a period of 18 months from 1st April, 2011 to 30th September, 2012 as the cotton season in India commences from October and ends in September each year so as to bring the financial year of the Company in line with the cotton season for the purpose of preparation of annual accounts, annual budget etc., In this regard, approval of the Registrar of Companies in Karnataka, Bangalore vide Order dated 12.04.2012 has been obtained.

2. FINANCIAL RESULTS:

In accordance with approval granted by the Shareholders, the Hydro Power Business of the Company has been transferred to its subsidiary Gokak Power & Energy Limited with effect from 20th September 2012. Surplus on such slump sale is shown separately in the financial results. The summarized financial results are set out below:

(Rs. in Crores)

(18 months) (12 months) 1st April 2011 to 1st April 2010 to 30st September 2012 31st March 2011

(a) Gross Income 484.22 414.30

(b) Less: Costs 490.29 366.80

(c) Balance (6.07) 47.50

(d) Less: Interest and

Financial Charges (Net) 39.65 24.73

(e) Balance 45.72 22.77

(f) Less: Depreciation 20.49 13.54

(g) Loss after depreciation carried

to Balance Sheet (66.21) 9.23

(h) Add: Surplus on slump sale 94.06

(i) Less: Write-off of Fixed Asset 9.04

(j) Balance 18.81 9.23

(k) Add: Net Tax Credit 0.67 (0.14)

(l) Net Profit / loss for the year 19.48 9.37

(m) Add: Balance brought forward (13.02) (22.39)

(n) Balance carried to Balance Sheet 6.46 (13.02)

3. SHARE CAPITAL & DIVIDEND:

The Paid up Share Capital of the Company continued to remain at Rs.6.50 Crores. With a view to preserve funds for the operations, no dividend for the year is proposed by the Board of Directors.

4. SHIFTING OF LOCATION OF REGISTERED OFFICE:

During the year, with effect from 2nd April, 2012, the Registered Office of the Company has been shifted from No.45/3, Gopalkrishna Complex, Residency Cross Road, Bangalore - 560 025 to No.24, 29th Main, BTM Layout II Stage, Bangalore

- 560 076 for operational convenience. This has been adveised to the shareholders, through a Notice published in Business Standard, a National Daily and Sanjeevani, a regional kannada newspaper on 23.04.2012.

5. SUBSIDIARY COMPANY :

Your Company has formed a subsidiary company in the name and style of 'Gokak Power & Energy Limited' on 17th January, 2012 and obtained a Certificate of Commencement of Business on 26th March, 2012. The main object of the subsidiary company is generation, transmission, distribution, trading of hydro power and other renewal and non-renewal sources of energy. The whole of the hydro power business of the Company was transferred to the above said Subsidiary company by way of a slump sale on 20.09.2012 for a consideration of Rs.120 Crores and for which approval of the shareholders has been obtained through postal ballot on 07.07.2012.

The financial information of the subsidiary company viz., Gokak Power & Energy Ltd. is set out in the statement pursuant to Section 212 of the Companies Act, 1956 forming part of this Annual Report. The audited statements of Accounts along with the Report of Board of Directors of Gokak Power & Energy Ltd., together with Auditor's report for the first financial year from 17.01.2012 to 30.09.2012 ended on 30th September, 2012 are appended.

While preparing Consolidated Financial Statements of the Company, financials of its subsidiary company viz., Gokak Power & Energy Ltd., have been consolidated as per Accounting Standard AS-21 issued by The Institute of Chartered Accountants of India, which forms part of the Annual Report.

7. DIRECTORS :

Export-Import Bank of India vide their letter dated 18th April, 2012 had appointed Ms.Rima Marphatia, General Manager of the Bank as their Nominee Director on the Board of Directors in place of Mr.Sanjay Sarkar. The Board of Directors places on record, their sincere appreciation of services rendered by Mr.Sanjay Sarkar to the Company

Mr.Ramaotar Goyal, Director resigned on 3rd May, 2012. He has rendered valuable services to the Company and the Board over the period of his association with the Company. The Board of Directors places on record their sincere appreciation of the services rendered by Mr.Ramaotar Goyal

Mr.Vasant N. Sanzgiri and Mr.D.GPrasad were appointed as Additional Directors on the Board of Directors of the Company with effect from 22nd May, 2012 and 28th May, 2012 respectively and holds office upto the date of this Annual General Meeting of the Company. The Board of Directors commends their appointment as the Directors of the Company.

Mr. Ashok Barat and Mr.R N. Jha Directors are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. The Board of Directors commends their re-appointment.

Particulars of Directors, who are proposed to be reappointed/ appointed at the ensuing Annual General Meeting are furnished as a separate statement Annexed to the Explanatory Statement of the Notice and Report on Corporate Governance.

None of the Directors of the Company are disqualified from being appointed as Directors as specified in terms of Section 274(1)(g) of the Companies Act, 1956.

8. CORPORATE GOVERNANCE :

A detailed report on Corporate Governance is annexed as a part of this Annual Report and Management Discussion and Analysis report forms a part of this report.

A Certificate on compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement issued by Mr.B.S.Srinivas, Practising Company Secretary is annexed to the Report on Corporate Governance.

9. DIRECTORS RESPONSIBILITY STATEMENT :

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956 and based on the representations received from the operating management, the Directors hereby confirm that :-

a. in the preparation of the annual accounts for the financial year from 01.04.2011 to 30.09.2012, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. they 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 at the end of the financial year and of the profit or loss of the Company for that period;

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

d. they have prepared the annual accounts for the financial year from 01.04.2011 to 30.09.2012 on a 'going concern' basis.

10. AUDITORS AND AUDIT REPORT:

Messrs. Kalyaniwalla & Mistry, Chartered Accountants, Statutory Auditors of the Company and Messrs. Murugesh & Company, Chartered Accountants, Branch Auditors of the Company to conduct audit of Forbes Campbell Knitwear Division of the Company hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of next Annual General Meeting and they are eligible for re-appointment. Audit Committee have recommended re-appointment of Auditors. Your Directors commend their reappointment. Observations of the auditors are self explanatory.

11. CORPORATE SOCIAL RESPONSIBILITY:

Established in 1887, the Company is one of the oldest and most modern textile plant in India located in a picturesque location adjacent to Ghataprabha river and Gokak water falls, making for a clean and wholesome environment. The Company is the pioneer in the field of hydro power generation in India. In order

to run the company's production facility with hydro power, conserve and preserve the water, Company built a mini dam in the form of a weir at Dhupdal and at Gokak Falls. A unique plantation effort by the company on rocky terrain led to the planting of over 2 million trees.

Since its inception, the company has expanded many folds and we are happy to inform that 4th & 5th generation of workers continue to have gainful employment with the Company. The Company followed a policy of providing employment to the local population majority of whom belong to backward classes and minority communities.

Apart from providing the employment and nurturing the vegetation, company runs several schools where more than 2800 students study. The uniqueness of the schools which are run by the Company is that, it provides education in Kannada, Marathi, Urdu and English as medium of instruction. The hospital, residential complex and several educational institutions provided by the Company are among the best in the region. The Company has also built and maintaining various places of worship catering to all the major religions. From time to time, Company has spent millions of rupees to upgrade the infrastructure.

Apart from afforestation, schools and hospitals, the Company continued to support causes of public utility both directly and indirectly in the field of education, medical relief, relief of poverty and promotion of sports and art.

12. COST AUDITORS :

The Central Government approved the appointment of Messrs. A G Anikhindi & Co., Cost Accountants, 1730, Rajarampuri, 6th Lane, Kolhapur-416008 Maharashtra State as Cost Auditors of the Company for the financial year 2011-12 covering 18 months period from 01.04.2011 to 30.09.2012.

The necessary books of accounts and cost records as required under Section 209(1)(d) of the Companies Act, 1956 and as applicable to the Textiles activities of the Company have been maintained.

13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO :

The particulars as prescribed under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are set out in the Annexure to this Report.

14. PARTICULARS OF EMPLOYEES :

There are no such particulars to be furnished as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Amendment Rules, 2011.

15. LISTING OF SHARES :

The equity shares of the Company are listed on the Bombay Stock Exchange Ltd., Mumbai. The Company has paid Listing Fees to the Stock Exchange.

16. ACKNOWLEDGEMENT:

Your Company continues to occupy a place of respect amongst the many stakeholders it is associated with, most of all, our valued customers. The Directors commend the continued commitment and dedication of employees at all levels. The Directors also wish to acknowledge the co-operation extended by workmen and its Union. Your Directors thank all other stakeholders including Financial Institutions and suppliers of various goods and services for their valuable and sustained support, encouragement and look forward to receive similar support and encouragement in the years ahead.

For and on behalf of the

Board of Directors

Mumbai SHAPOOR P. MISTRY

31 October, 2012. Chairman

Registered Office :

No.24, 29th Main,

BTM Layout II Stage

Bangalore - 560 076


Mar 31, 2011

The Shareholders

The Directors submit their Report and Audited Accounts of the Company for the year ended 31st March, 2011.

1. FINANCIAL RESULTS:

The summarized financial results are set out below :

(Rs. in Crores)

For the year For the year ended ended 31st March 2011 31st March 2010

(a) Gross Income 405.49 313.40

(b) Less: Costs 358.14 293.25

(c) Balance 47.35 20.15

(d) Less: Interest and Financial Charges (Net) 24.58 25.15

(e) Balance 22.77 (5.00)

(f) Less: Depreciation 13.54 12.91

(g) Loss after depreciation carried to Balance Sheet 9.23 (17.91)

(h) Less: Provision for taxation (0.14) (13.92)

(i) Net Profit / loss 9.37 (3.99)

(j) Add : Balance brought forward (22.39) (18.40)

(k) Balance carried to Balance Sheet (13.02) (22.39)

Your Company has recorded gross income of Rs.405.49 Crores. for the year ended 31st March, 2011 as compared to Rs.313.40 Crores in the year ended 31st March, 2010 and profit after tax of Rs.9.37 Cores for the year under review as compared to net loss of Rs.3.99 Crores for the year ended 31st March, 2010. The year 2010-11 witnessed a reasonable improvement in the Company's business performance. The profit includes profit on sale of investment of Rs.7.34 Crores.

2. SHARE CAPITAL & DIVIDEND:

The Paid up Share Capital of the Company is Rs.6.50 Crores. No dividend for the year is proposed.

4. DIRECTORS :

Mr. Kaiwan Kalyaniwalla was appointed as Additional Director of the Company with effect from 24th September, 2010 and holds office upto the date of this Annual General Meeting of the Company. The Board of Directors commends the appointment of Mr.Kaiwan Kalyaniwalla as a Director of the Company.

Mr.Shapoor P. Mistry and Mr.Pallonji S. Mistry are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. The Board of Directors commends their re-appointment.

Export-Import Bank of India had appointed vide their letter dated 29.04.2011, Mr.Sanjay Sarkar as their nominee on the Board of Directors in place of Mr.D.G.Prasad. The Board places on record, their sincere appreciation of services rendered by Mr.D.G.Prasad to the Company.

Particulars of Directors, who are proposed to be reappointed at ensuing Annual General Meeting are furnished as a separate statement annexed to the Explanatory Statement of the Notice and Report on Corporate Governance.

None of the Directors of the Company are disqualified from being appointed as Directors as specified in terms of Section 274(1)(g) of the Companies Act, 1956.

5. CORPORATE GOVERNANCE :

A detailed report on Corporate Governance is annexed as a part of this Annual Report and Management Discussion and Analysis report forms a part of this report.

A Certificate on compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement issued by Mr.B.S.Srinivas, Practising Company Secretary is annexed to the Report on Corporate Governance.

6. DIRECTORS RESPONSIBILITY STATEMENT :

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956 and based on the representations received from the operating management, the Directors hereby confirm that:–

a. in the preparation of the annual accounts for the financial year ended 31st March, 2011, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. they 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 at the end of the financial year and of the profit or loss of the Company for that period;

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

d. they have prepared the annual accounts for the financial year ended 31st March, 2011 on a ‘going concern' basis.

7. DISINVESTMENT OF SHARES OF P.T. GOKAK INDONESIA :

The Company held 1375 shares of face value of US$ 1000 each of P.T. Gokak Indonesia, of book value of Rs.1,000/-. During the year, these shares have been sold and company has earned a profit of Rs.7.34 Crores.

8. AUDITORS AND AUDIT REPORT:

Messrs. Kalyaniwalla & Mistry, Chartered Accountants, Statutory Auditors of the Company and Messrs. H. B. Murugesh & Company, Chartered Accountants, Branch Auditors of the Company to conduct audit of Forbes Campbell Knitwear Division of the Company hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of next Annual General Meeting and they are eligible for re-appointment. Audit Committee have recommended re-appointment of Auditors. Your Directors commend their reappointment.

9. CORPORATE SOCIAL RESPONSIBILITY:

Apart from afforestation, schools and hospitals, the Company continued to support causes of public utility both directly and indirectly in the field of education, medical relief, relief of poverty and promotion of sports and art.

10. COST AUDITORS :

The Central Government approved the appointment of Messrs. A G Anikhindi & Co., Cost Accountants, 1730, Rajarampuri, 6th Lane, Kolhapur-416008 Maharashtra State as Cost Auditors of the Company for the financial year 2010-11.

The necessary books of accounts and cost records as required under Section 209(1)(d) of the Companies Act, 1956 and as applicable to the Textiles activities of the Company have been maintained. The Cost Audit Report for the year 2009-10 has been filed with Central Government on 17th September, 2010 within the due date.

11. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO :

The particulars as prescribed under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are set out in the Annexure to this Report.

12. PARTICULARS OF EMPLOYEES :

There are no such particulars to be furnished as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Amendment Rules, 2011.

13. SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKE-OVERS) REGULATIONS, 1997:

Persons constituting group coming within the definition of "Group" as defined in the Monopolies and Restrictive Trade Practices Act, 1969 include the following:-

1. Shapoorji Pallonji & Company Ltd.,

2. Abhipreet Trading Co.Pvt. Ltd.,

3. Afcons (Overseas) Constructions and Investments Pvt.Ltd.,

4. Afcons Offshore and Marine Services Pvt. Ltd.,

5. Afcons Construction Mideast LLC Dubai, UAE

6. Afcons Gulf International Projects Services FZE

7. Afcons Infrastructure Ltd.,

8. Afcons Infrastructure International Ltd., (AIIL) Mauritius

9. Afcons Madagascar Overseas SARL, Madagascar

10. Alaya Properties Pvt. Ltd.,

11. Archaic Properties Pvt.Ltd.,

12. Aquamall Water Solutions Ltd.,

13. Aquadiagnostics Water Research & Technology Centre Ltd.,

14. Bengal Shapoorji Business Parks Pvt.Ltd.,

15. Bengal Shapoorji Infrastructure Development Pvt.Ltd.,

16. Blue Riband Properties Pvt.Ltd.,

17. Cama Properties Pvt.Ltd.,

18. Chinsha Properties Pvt. Ltd.,

19. Corporate Apparel U.S.A., Inc

20. Cyrus Engineers Pvt. Ltd.,

21. Delna Finance & Investments Pvt. Ltd.,

22. Delphi Properties Pvt. Ltd.,

23. Devine Realty & Construction Pvt. Ltd.,

24. Doris Properties Pvt.Ltd.,

25. Drashti Developers Pvt. Ltd.,

26. East View Estate Pvt. Ltd., 27. Eureka Forbes Ltd.,

28. Euro Forbes International Pte. Ltd.,

29. E4 Development & Coaching Ltd,.

30. Empower Builders Pvt. Ltd.,

31. Firstrock Infrastructure Pvt. Ltd.,

32. Fayland Estates Pvt. Ltd.,

33. Flamboyant Developers Pvt. Ltd.,

34. Flooraise Developers Pvt.Ltd.,

35. Floral Finance Pvt. Ltd.,

36. Floreat Investments Ltd.,

37. Flotilla Finance Pvt. Ltd.,

38. Forvol International Services Ltd.,

39. Forbes & Company Ltd.,

40. Forbes Aquamall Ltd.,

41. Forbes Bumi Armada Ltd.,

42. Forbes Campbell Finance Ltd., (formerly known as Latham India Ltd.,)

43. Forbes Campbell Services Ltd.,

44. Forbes Edumetry Ltd.,

45. Forbes Environ Solutions Ltd.,

46. Forbes Facility Services Pvt. Ltd.,

47. Forbes Smart Data Ltd., 48. Forbes Technosys Ltd.,

49. Gallops Developers Pvt. Ltd.,

50. Gossip Properties Pvt.Ltd.,

51. Hazarat & Company Pvt.Ltd.,

52. Hermes Commerce Ltd,.

53. High Point Properties Ltd.,

54. Khvafar Investments Pvt. Ltd.,

55. Joy Car Care Pvt. Ltd.,

56. Lucrative Properties Pvt. Ltd.,

57. Magpie Finance Pvt. Ltd.,

58. Make home Realty & Construction Pvt. Ltd.,

59. Manjri Developers Pvt.Ltd.,

60. Manjri Horse Breeders Farm Pvt.Ltd.,

61. Mazsons Builders & Developers Pvt.Ltd.,

62. Meriland Estates Pvt.Ltd.,

63. Mileage Properties Pvt.Ltd.,

64. Miracletouch Developers Pvt. Ltd.,

65. Mydream Properties Pvt. Ltd.,

66. Neil Properties Pvt.Ltd.,

67. Next Gen Publishing Ltd.,

68. Palchin Real Estates Pvt.Ltd.,

69. Phenomenon Developers Pvt. Ltd.,

70. Precaution Properties Pvt.Ltd.,

71. PSC Engineers Pvt. Ltd.,

72. Radiant Energy Systems Pvt. Ltd.,

73. Range Consultants Pvt. Ltd.,

74. Relationship properties Pvt. Ltd.,

75. Renaissance Commerce Pvt. Ltd.,

76. S.C.Impex Pvt.Ltd.,

77. Shachin Real Estate Pvt. Ltd.,

78. Shapoorji & Co.Pvt.Ltd.,

79. Shapoorji Data Processing Pvt. Ltd., 80. Shapoorji Drilling Enterprises Pvt. Ltd.,

81. Shapoorji Pallonji Finance Ltd.,

82. Shapoorji Hotels Pvt.Ltd.,

83. Shapoorji Pallonji Infrastructure Capital Co.Ltd.,

84. Shapoorji Pallonji Investment Advisors Pvt. Ltd., (formerly known as Euphoria Properties Pvt. Ltd.,)

85. Shapoorji Pallonji International, Fujairah, UAE

86. Shapoorji Pallonji International, Dafza, UAE

87. Shapoorji Pallonji Infrastructure (Gujarat) Pvt. Ltd., 88. Shapoorji Pallonji Cement (Gujarat) Pvt. Ltd.,

89. Shapoorji Pallonji Energy (Gujarat) Pvt. Ltd,.

90. Shapoorji Pallonji (Gwalior) Pvt. Ltd.,

91. Shapoorji Pallonji Industrial Park Pvt. Ltd.,

92. Shapoorji Pallonji Ports Pvt.Ltd.,

93. Shapoorji Pallonji Power Co.Ltd.,

94. Sharus Building Services Pvt. Ltd.,

95. Shatranj Properties Pvt. Ltd.,

96. Simar Engery (Gujarat) Pvt. Ltd.,

97. Simar Port Pvt. Ltd.,

98. SP Agri Management Services Pvt.Ltd.,

99. SP Aluminium Systems Pvt. Ltd.,

100. SP Architectural Coatings Ltd.,

101. SP Biosciences Pvt. Ltd.,

102. SP Fabricators Pvt. Ltd.,

103. SP Infocity Developers Pvt. Ltd.,

104. SP Simar Infrastructure Zone Pvt. Ltd.,

105. SP International

106. Steppe Developers Pvt. Ltd.,

107. Sterling Generators Pvt. Ltd.,

108. Sterling Industries FZ LLC

109. Sterling and Wilson Ltd.,

110. Sterling and Wilson International FZE

111. Sterling and Wilson Powergen Pvt. Ltd.,

112. SSS Electricals (India) Pvt. Ltd.,

113. Sunny View Estates Pvt. Ltd.,

114. Think Ahead Properties Pvt. Ltd.,

115. United Motors (India) Ltd.,

116. Universal Mine Developers and Service Providers Pvt. Ltd.,

117. Volkart Fleming Shipping & Services Ltd.,

118. Waterwings Equipments Pvt. Ltd.,

13. LISTING OF SHARES :

The equity shares of the Company are listed on the Bombay Stock Exchange Ltd., Mumbai. The Company has paid Listing Fees to the Stock Exchange.

15. ACKNOWLEDGEMENT:

Your Company continues to occupy a place of respect amongst the many stakeholders it is associated with, most of all, our valued customers. The Directors commend the continued commitment and dedication of employees at all levels. The Directors also wish to acknowledge the co-operation extended by workmen and its Workmen Union. Your Directors thank all other stakeholders including Financial Institutions for their valuable and sustained support, encouragement and look forward to receive similar support and encouragement in the years ahead.

For and on behalf of the Board of Directors

SHAPOOR P. MISTRY Chairman

Mumbai 30th May, 2011.

Registered Office : 1st Floor, 45/3 Gopalkrishna Complex Residency Cross Road Bangalore – 560 025.


Mar 31, 2010

The Directors submit their Report and Audited Accounts of the Company for the year ended 31st March, 2010.

1. F1NANCIAL RESULTS:

The summarized financial results are set out below :

(Rs. in Crores)

For the year For the year ended ended 31st March 2010 31st March 2009

(a) Gross Income 313.40 270.63

(b) Less: Costs 293.25 264.44

(c) Balance 20.15 6.19

(d) Less: Interest and 25.15 17.64 Financial Charges (Net)

(e) Balance (5.00) (11.45)

(f) Less: Depreciation 12.91 12.44

(g) Loss after depreciation (17.91) (23.89) carried to Balance Sheet

(h) Less: Provision for taxation (13.92) 1.47

(i) Net Loss (3.99) (25.36)

Your Company has recorded gross income of Rs.313.40 Crores. for the year ended 31st March, 2010 as compared to Rs.270.63 Crores in the year ended 31st March, 2009. The year 2009-10 witnessed a reasonable improvement in the Companys business performance and reduction of loss. For the year ended 31st March, 2010, in compliance with Accounting Standard 22 the deferred tax asset on only post demerger unabsorbed depreciation has been recognized to the extent of deferred tax liability on account of depreciation.

2. SHARE CAPITAL & DIVIDEND :

The Paid up Share Capital of the Company is Rs.6.50 Crores. Considering the results, no dividend for the year is proposed.

4. DIRECTORS :

Mr.C.G.Shah, Mr.H.S.Billimoria and Mr.Ramaotar Goyal, Directors are liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment.

Mr.H.S.Bhaskar, Executive Director & CEO is eligible for reappointment as Whole time Director of the Company for a period of 3 years with effect from 31.07.2010. The Board of Directors commends their re-appointment.

Particulars of Directors, who are proposed to be reappointed at ensuing Annual General Meeting are furnished as a separate statement annexed to the Explanatory Statement of the Notice and Report on Corporate Governance.

None of the Directors of the Company are disqualified from being appointed as Directors as specified in terms of Section 274(1 )(g) of the Companies Act, 1956.

5. CORPORATE GOVERNANCE:

A detailed report on Corporate Governance is annexed as a part of this Annual Report and Management Discussion and Analysis report forms a part of this report.

A Certificate on compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement issued by Mr. B.S.Srinivas, Practising Company Secretary is annexed to the Report on Corporate Governance.

6. DIRECTORS RESPONSIBILITY STATEMENT :

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representation received from the operating management, confirm.

a. that in the preparation of the annual accounts for the financial year ended 31st March, 2010, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

b. 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 at the end of the financial year and of the profit or loss of the Company for that period;

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

d. that the Directors had prepared the annual accounts for the financial year ended 31st March, 2010 on a going concern basis.

7. AUDITORS AND AUDIT REPORT :

Messrs. Kalyaniwalla & Mistry, Chartered Accoantants, Statutory Auditors of the Company and Messrs. H. B. Murugesh & Company, Chartered Accountants, Branch Auditors of the Company to conduct audit of Forbes Campbell Knitwear Division of the Company hold office from the conclusi an of the ensuing Annual General Meeting until the conclusion of next Annual General Meeting and they are eligible for re-appointment. Audit Committee have recommended re-appointment of Auditors. Your Directors commend their reappointment.

8. CORPORATE SOCIAL RESPONSIBILITY :

Apart from afforestation, schools and hospitals, the Company continued to support causes of public utility both directly and indirectly in the field of education, medical relief, relief cf poverty and promotion of sports and art.

9. COST ACCOUNTING RECORDS (COTTON TEXTILES) RULES, 1977:

The necessary books of accounts and cost records as required under Section 209(1 )(d) of the Companies Act, 1956 and as applicable to the Textiles activities of the Company have been maintained.

10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO :

The particulars as prescribed under Section 217 (I) ie) of the Companies Act. 1956 read with Companies (Disc osure of Particulars in the Report of the Board of Directors) Ri les, 1988 are set out in the Annexure to the Directors Report.

11. PARTICULARS OF EMPLOYEES:

The particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, forms part of the Report. Having regard to the provisions of Section 219(l)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the statement of particulars of employees under Sectior 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered office of the Company.

12 SEBI-SUBSTANTIAL ACQUISITION OF SHARES AND TAKE-OVER REGULATIONS, 1997 :

Persons constituting group coming within the definition of "Group" as defined in the Monopolies and Restrictive Trade Practices Act, 1969 include the following:-

1. Sterling Investment Corporation Pvt. Ltd.,

2. Abhipreet Trading Co.Pvt.Ltd.

3. Aquamalla Water Solutions Ltd.,

4. Aquadiagnostics Water Research & Technology Centre Ltd.,

5. Afcons (Overseas) Constructions and Investments Pvt.Ltd.

6. Afcons Infrastructure Ltd.,

7. Afcons Arethusa Offshore Services Ltd.,

8. Alaya Properties Pvt. Ltd.,

9. Archaic Properties Pvt. Ltd.,

10. Bengal Shapoorji Business Parks Pvt.Ltd.

11. Bengal Shapoorji Infrastructure Development Pvt.Ltd.

12. Blue Riband Properties Pvt.Ltd.

13. Cama Properties Pvt. Ltd.,

14. Chinsha Property Pvt. Ltd.,

15. Corporate Apparel U.S.A., Inc

16 Cyrus Chemicals Pvt.Ltd.

17. Cyrus Engineers Pvt.Ltd.

18. Cyrus Investments Ltd.

19 Delna Finance & Investments Pvt.Ltd.

20 Delphi Properties Pvt. Ltd.,

21. Devine Realty & Construction Pvt. Ltd.,

22. Doris Properties Pvt.Ltd.

23. Drashti Developers Pvt. Ltd

24. East View Estate Pvt.Ltd.

25. Eureka Forbes Ltd.,

26. Euphoria Properties Pvt. Ltd.

27. Euro Forbes International Pte.Ltd.,

28. E4 Development & Coaching Limited

29. Empower Builders Pvt. Ltd.,

30. Firstrock Infrastructure Pvt.Ltd.

31. Flamboyant Developers Pvt. Ltd.,

32. Flooriase Developers Pvt.Ltd.

33. Floral Finance Pvt.Ltd.

34. Floreat Investments Ltd.

35. Flotilla Finance Pvt.Ltd.

36. Forvol International Services Ltd.

37. Forbes & Company Ltd.

38. Forbes Aquamall Ltd.,

39. Forbes Bumi Armada Ltd.,

40. Forbes Campbell Services Ltd.,

41. Forbes Container Lines Pte. Ltd.,

42. Forbes Edumetry Ltd.,

43. Forbes Environ Solutions Pvt. Ltd

44. Forbes Facility Services Pvt. Ltd.,

45. Forbes Smart Data Limited

46. Forbes Technosys Limited

47. Gallop Developers Pvt. Ltd.,

48. Gossip Properties Pvt. Ltd.

49. Hazarat & Company Pvt. Ltd.,

50. Hermes Commerce Ltd., (formerly Afcons Dredging & Marine Services Ltd.,)

51. High Point Properties Pvt. Ltd.,

52. Khajrana Ganesh Properties Pvt. Ltd.

53. Latham India Ltd.,

54. Lucrative Properties Pvt. Ltd.

55. Magpie Finance Pvt. Ltd.,

56. Make home Realty & Construction Pvt. Ltd.,

57. Manjri Developers Pvt.Ltd.

58. Manjri Horse Breeders Farm Pvt.Ltd.

59. Mazsons Builders & Developers Pvt. Ltd.,

60. Meriland Estates Pvt.Ltd.

61. Mileage Properties Pvt.Ltd.

62. Miracletouch Developers Pvt. Ltd.,

63. Mydream Properties Pvt. Ltd.,

64. Next Gen Publishing Ltd.,

65. Neil Properties Pvt.Ltd.

66. Palchin Real Estates Pvt.Ltd.

67. Phenomenon Developers Pvt. Ltd.,

68. Precaution Properties Pvt.Ltd.

69. Radiant Energy Systems Pvt. Ltd.,

70. Range Consultants Pvt. Ltd.,

71. Ramili Investments Pvt. Ltd.,

72. Relationship properties Pvt.Ltd.

73. Renaissance Commerce Pvt. Ltd., (formerly Afcons BOT Constructions Pvt. Ltd.,)

74. S.C.Impex Pvt.Ltd.

75. Shachin Real Estate Pvt.Ltd.

76. Shapoorji & Co.Pvt.Ltd.

77. Shapoorji Data Processing Pvt.Ltd.

78. Shapoorji Drilling Enterprises Pvt.Ltd.

79. Shapoorji Pallonji Finance Ltd.,

80. Shapoorji Pallonji Biotech Pvt. Ltd.,

81. Shapoorji Pallonji Hotels Pvt. Ltd.,

82. Shapoorji Pallonji Infrastructure Capital Co.Ltd.

83. Shapoorji Pallonji Infrastructure (Gujarat) Pvt. Ltd.,

84. Shapoorji Pallonji International, Fujairah, UAE

85. Shapoorji Pallonji International, Dafza, UAE

86. Shapporji Pallonji Cement (Gujarat) Pvt. Ltd.,

87. Shapoorji Pallonji Energy (Gujarat) Pvt. Ltd.,

88. Shapoorji Pallonji (Gwalior) Pvt. Ltd.,

89. Shapoorji Pallonji Industrial Park Pvt. Ltd.,

90. Shapoorji Pallonji Ports Pvt.Ltd.

91. Shapoorji Pallonji Power Co.Ltd.

92. Shams Building Services Pvt.Ltd.

93. Shatranj Properties Pvt.Ltd.

94. Simar Engery (Gujarat) Pvt, Ltd.,

95. Simar Port Private Limited

96. SP Agri Management Services Pvt.Ltd.

97. SP Aluminium Systems Pvt.Ltd.

98. SP Architectural Coatings Ltd.

99. SP Bioscience Pvt. Ltd.

100. SP Biofuel Ventures Pvt. Ltd.,

101. SP Fabricators Pvt. Ltd.,

102. SP Infocity Developers Pvt. Ltd.,

103. SP Research Laboratories Pvt. Ltd.,

104. SP Simar Infrastructure Zone Pvt. Ltd.,

105. SP International

106. Steppe Developers Pvt. Ltd.,

107. Sterling Generators Pvt.Ltd.

108. Sterling Industries FZ LLC

109. Sterling and Wilson Pvt. Ltd.,

110. Sterling and Wilson International FZE

111. Sterling and Wilson Powergen Pvt. Ltd.,

112. SSS Electricals (India) Pvt. Ltd.,

113. Sunny View Estates Pvt.Ltd.

114. Think Ahead Properties Pvt.Ltd.

115. United Motors (India) Ltd.

116. Volkart Fleming Shipping & Services Ltd.,

117. Waterwings Equipments Pvt. Ltd.,

13. LISTING OF SHARES :

The equity shares of the Company are listed on the Bombay Stock Exchange Ltd., Mumbai. The Company has paid Listing Fees to the Stock Exchange.

14. ACKNOWLEDGEMENT:

Your Company continues to occupy a place of respect amongst the many stakeholders it is associated with, most of all our valued customers. The Directors commend the continued commitment and dedication of employees at all levels. The Directors also wish to acknowledge the co-operation extended by Workmen and its Workmen Union. Your Directors thank all other stakeholders including Financial Institutions for their valuable and sustained support, encouragement and look forward to receive similar support and encouragement in the years ahead.

For and on behalf of the Board of Directors Mumbai

27th May, 2010. SHAPOOR P. MISTRY

Registered Office : Chairman

1st Floor, 45/3 Gopalkrishna Complex Residency Cross Road Bangalore - 560 025

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