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Directors Report of Himachal Fibres Ltd.

Mar 31, 2015

The Directors have pleasure in presenting the 34th Annual Report together with the Audited Statement of Accounts of Himachal Fibres Limited for the year ended 31st March, 2015.

1. FINANCIAL HIGHLIGHTS.

The summary of the financial performance of the Company for the financial year ended March 31, 2015 compared to the previous year ended March 31, 2014 is given below:

Particulars Year Ended Year Ended March 31,2015 March 31,2014

Net Sales/Income 8471.59 13071.53

Gross profit before interest and depreciation 671.52 699.33

Finance cost 458.94 433.52

Profit before depreciation and amortization- (Cash Profit) 214.33 276.68

Depreciation and Amortization 210.09 270.37

PBT before exceptional items 4.24 6.30

Exceptional items 0.00 0.00

Profit before Tax (PBT) 4.24 6.30

Provision for Tax- Current 0.81 1.21

Provision for Tax- Deferred 127.44 17.91

Profit after Tax (124.01) (12.81)

Earnings per Share (EPS) (in Rs)

(after exceptional item ) In Lacs

Basic (0.14) (0.15)

- Diluted (0.14) (0.15)

2. OPERATIONAL REVIEW :

The net salefor the year is Rs.8471.59 as compared to Rs. 13071.53 lacs of previous year. The Net Loss for the year ended 31.03.2015 is Rs. 124.01 Lacs as compare to Net Loss of Rs. 12.81 Lacs for the previous year.

3. MANAGEMENT DISCUSSION & ANALYSIS REPORT

3.1 Industry And Economic Scenario & Outlook

Indian economic growth in 2014 rose to 5.2% from 4.7% last year as a result of the improving macro-economic situation. The wholesale and consumer price inflation has fallen to 4.2% and 7.4% from last year's 6.3% and 10.1% on the back of a strong base effect. However, the slow pace of reforms, lack of impetus for infrastructure projects, high interest rates and tightening of fiscal policies adversely impacted the capital goods sector. Industrial production / output was also sluggish. The low economic growth appears to have bottomed out and a gradual increase in economic activity is expected in 2015. With the coming of new Govt. in the Centre it is expected that the economy should grow in the coming years and the demand for and prices of textile products should improve which will enable the Company to regain steady or better performance.

3.2 Opportunities And Threats

Opportunities:

a) Large, potential Domestic and International Market

b) Product Development and Diversification to cater Global Needs

c) Greater Investment and FDI opportunities are available.

d) Industry has large and diversified segments that provide wide variety of products

Threats:

a) Unfavorable Labour Laws

b) High Indirect Taxes, Power and Interest Rates

c) Unfavorable Government policies

d) Lower Productivity in various segments.

e) To balance between Demand and Supply

3.3 Risk And Concerns

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Business Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board's Report. The Company has a robust Business Risk Management (BRM) framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

The key business risks identified by the Company and its mitigation plans are as under.

a) Risk related to Personnel

Our business is increasingly dependent on the skills and competencies of our employees and management team. The general war for talent in our growing economy has created a substantial risk related to the retention of key personnel both in manufacturing and managerial levels. This risk is mitigated through effective HR policies relating to recruitment and retention and a proactive remuneration and rewards policy that is periodically reviewed at the highest management level. With excellent performance track as well as best HR practices we are able to attract and retain people for growth of our business.

b) Risk related to Safety

The company has taken adequate insurance covers to indemnify the risks associated with the safety of personnel, building, stock and other infrastructure of the Company. These include:

1. Fire Insurance Policies.

2. Marine/ Transit Insurance Policies.

3. Theft Insurance Policies.

4. Other Miscellaneous Policies.

The company has also taken steps to strengthen IT security system as well as physical security system at all our locations

c) Compliance Related Risks

The Company is committed to being a responsible corporate citizen and respects the laws and regulations of the country. All the compliances under various laws applicable to the Company, including under Companies Act 1956/2013, Factories Act, Income Tax Act 1961 etc., are followed in Letter & Spirit.

3.4 Internal Control Systems And Their Adequacy

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman and Managing Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

3.5 Human Resources/ Human Resource Management.

The Company recognizes people as its most valuable asset and it has built an open, transparent and meritocratic culture to nurture this asset. Talent Management is a key people planning tool that provides an integrated means of identifying, selecting, developing and retaining top talent within our organization. Your Company has kept a sharp focus on Employee Engagement.

4. TRANSFER TO RESERVE

Due to losses in the current year, the company has not transferred any amount in any reserve.

5. DIVIDEND

Due to losses in the current year the Board of Directors of your Company has not recommended any dividend for the financial year 2014 - 2015.

6. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Since there was no unpaid/unclaimed Dividend declared and paid last year, the provisions of Section 125 of the Companies Act, 2013 do not apply.

7. SHARE CAPITAL

The paid up Equity Share Capital as on March 31, 2015 was Rs. 2212.50 Lacs. During the year under review the company has not issued any shares or any convertible instruments. Face value of the Shares of the company was reduced by way of Sub-division of nominal value of each Equity Share of Rs. 10/- (Rupees Ten Only) each into 10 Equity Shares of Rs. 1/-(Rupees One only) each.

7.1 BUY BACK OF SECURITIES

The Company has not bought back any o f its securities during the year under review.

7.2 SWEAT EQUITY

The Company has not issued any Sweat Equity Shares during the year under review.

7.3 BONUS SHARES

No Bonus Shares were issued during the year under review.

7.4 EMPLOYEES STOCK OPTION PLAN

The Company has not provided any Stock Option Scheme to the employees.

8. FINANCE

8.1 CASH AND CASH EQUIVALENT

Cash and Cash equivalent as at 31st March, 2015 is Rs. 56.14 lacs. The Company continues to focus on judicious management of working capital. Working Capital parameters are kept under strict check through continuous monitoring.

8.2 DEPOSITS/ FIXED DEPOSITS

During the year, Company has not accepted deposit from the public falling within the ambit o f Section 73 of Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Further, the Company has no t repaid any deposit to public and there is no deposits are pending as on 31st March, 2015.

8.3 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

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

9. BOARD

The Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help us retain our competitive advantage.

9.1 No. Of Meetings Of The Board

During the year Eight (8) Board Meetings and Five (5) 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.

9.2 Policy on Director's Appointment and Remuneration.

The current policy is to have an appropriate mix of executive and independent directors to maintain the independence o f the Board, and separate its functions of governance and management. As on March 31, 2015, the Board consists o f 6 members, three of whom are executive or whole-time directors, and three are independent directors. The Board periodically evaluates the need for change in its composition an d size.

The Company has adopted Nomination and Remuneration policy for directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence o f a director and other matters provided under the Companies Act, 2013 and clause 49 of the Listing Agreement. We affirm that the remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the Company. The Nomination and Remuneration policy is explained in Corporate Governance Repo rt.

9.3 Declaration By Independent Directors

The Company has received necessary declaration from each independent director under Section 149(7) o f the Companies Act, 2013, that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement

9.4 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, Nomination & Remuneration. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

9.5 Training of Independent Directors.

Every new independent director of the Board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of our Company, the executive directors / senior managerial personnel make presentations to the inductees about the Company's strategy, operations, product, markets, organization structure, finance, human resources, technology, quality, facilities and risk management.

9.6 Re- Appointments

As required under clause 49 of the Listing Agreement, the details of Director appointed/reappointment are given in this annual Report and forms part of this report.

9.7 Retirements and Resignations

During the year under review Sh. D. S. Rana, Sh. Pawan Nagpal and Sh. Raj Mittal have resigned from the directorship of the company w.e.f. 14.02.2015,12.11.2014 and 21.04.2014 respectively.

10. COMMITTEES OF THE BOARD

a) Audit Committee

The Audit Committee was reconstituted in accordance with the provisions of Companies Act, 2013 and clause 49 of listing agreement on 28.05.2014. Audit Committee includes Mr. Sushil Singla (Chairman), Mr. Rajan Dhawan, Mr. Akhil Malhotra. The term of reference and other details are given in Corporate Governance Report and forms part of this report.

b) Nomination and Remuneration Committee

The remuneration committee was renamed and reconstituted as Nomination and Remuneration Committee at a board meeting held on 28.05.2014. The terms of reference of the committee are disclosed in Corporate Governance Report and forms part of this report. Nomination & Remuneration Policy is annexed as Annexure-Fto Board Report.

c) Corporate Social Responsibility Committee

The provisions of Companies Act, 2013 regarding Corporate Social Responsibility are not attracted to the company So, the Company has not contributed towards it as Corporate Social Responsibility Committee is not applicable.

d) Stakeholder Remuneration Committee

The Stakeholders' Relationship Committee was constituted by the Board on 28 May, 2014 consequent to the dissolution of the Shareholders'/ Investors' Grievance Committee). This Committee includes Mr. Sushil Singla (Chairman), Mr. Rajan Dhawan, Mr. Akhil Malhotra. Term of reference and other details are given in Corporate Governance Report and forms part of this report.

e) Risk Management Committee

The Company has formed the Risk Management Committee with its members as Mr. Akhil Malhotra (Chairman), Mr. Mayank Malhotra , Mr. Sushil Kumar Singla and Mr. Rajan Dhawan and the committee will perform its activities according to the Risk Policy finalized by the Board indicating the development and implementation of Risk Management.

f) Securities Transfer Committee

The Securities Transfer Committee was constituted at a board meeting held on 28.05.2014. The committee detail is disclosed in Corporate Governance Report and forms part of this report.

g) Banking And Finance Committee

The Banking and Finance Committee was constituted at a board meeting held on 28.05.2014. The committee detail is disclosed in Corporate Governance Report and forms part of this report.

11. DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submit its responsibility Statement: —

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the directors had prepared the annual accounts on a going concern basis; and

e) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.- Not applicable to Private Limited Company.

Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

12. AUDITORS

12.1 Statutory Auditors

M/s Sumat Gupta & Co. ( FRN : 010288N) , Chartered Accountants, were appointed as Statutory Auditors for a period of three years in the Annual General Meeting held on 30.09.2014. Their continuance of appointment and payment of remuneration are to be confirmed and approved in the ensuing Annual General Meeting. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

12.2 Secretarial Auditors

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 Rajeev Bhambri & Associates (CP No.: 9491, FCS: 4327),Company Secretaries to undertake the secretarial audit of the company. The Secretarial Audit Report is annexed herewith as 'Annexure - A'.

12.3 Internal Auditors

Mr. Shekhar Bansal performs the duties of internal auditors of the company and their report is reviewed by the audit committee from time to time.

12.4 Cost Auditor

The Cost Audit was not applicable on the Company during the Financial year 2014-15 as per Companies (Cost record & audit) Rules, 2014 dated 30.06.2014. Further as per amendment in the above said rules vide notification dated 31.12.2014, M/s J. Verma & Associates, cost Accountants, Jalandhar was appointed to conduct the Cost Audit of the Company for the Financial Year 2015-16.

13. LISTING OF SECURITIES

The Securities of the Company are listed on Bombay Stock Exchange Limited. The Company has paid annual listing fee to exchanges for the year 2015-16.

14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

15. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as 'Annexure- B'

16. VIGIL MECHANISM / WHISTLE BLOWER POLICY.

The Company has a vigil mechanism named Fraud Risk Management Policy (FRM) to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

17. SUBSIDIARIES,JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary, Joint venture or Associate Company.

18. RELATED PARTY TRANSACTIONS/ PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES.

All transactions entered into with Related Parties as defined under Clause 49 of the Listing Agreement during the financial year were in the ordinary course of business and on an arm's length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements. The report of the Board in respect of the particular of contracts or arrangements with related parties referred to sub section (1) of Section 188 in form AOC-2 is annexed to this report in annexure- C

19. CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from Practicing Company Secretary confirming compliance forms an integral part of this Report.

20. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL), ACT, 2013

The Company has in place a prevention of sexual Harassment policy in line with the requirements of the sexual Harassment of Women at the Workplace (prevention, prohibition and Redressal) Act, 2013. During the year 2014-15, no complaint were received by the Company related to sexual Harassment.

21. CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION. FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under section 134 (3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure- D"

22. PARTICULARS OF EMPLOYEES

The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to the Board's report as per Annexure- E

Since there is no employee receiving remuneration of Rs. 60 lakh or more, or employed for part of the year and in receipt of Rs. 5 lakh or more a month, there is no information requires to be given under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014,

23. APPRECIATION AND ACKNOWLEDGEMENTS

The company has been very well supported from all quarters and therefore your directors wish to place on record their sincere appreciation for the support and co-operation received from Employees, Dealers, Suppliers, Central and State Governments, Bankers and others associated with the Company. Your Directors wish to thank the banks, financial institutions, shareholders and business associates for their continued support and cooperation. We look forward to receiving the continued patronage from all quarters to become a better and stronger company.

24. CAUTIONARY STATEMENT

The statements contained in the Board's Report and Management Discussion and Analysis contain certain statements relating to the future and therefore are forward looking within the meaning of applicable securities, laws and regulations.

Various factors such as economic conditions, changes in government regulations, tax regime, other statues, market forces and other associated and incidental factors may however lead to variation in actual results.

FOR AND ON BEHALF OF BOARD



sd/-

Akhil Malhotra

Managing Director


Mar 31, 2014

Dear Fellow,

The Directors of your Company are presenting their 33th Annual Report on the affairs of the Company together with Audited Financial Statements of the Company for the year ended 31st March, 2014.

1. Financial Results

THE FINANCIAL AND OPERATIONAL PERFORMANCE OF THE COMPANY IS AS FOLLOWS:

Rs. In Lacs 2013-14 2012-13 (12 Months) (12 Months)

Sales 13057.30 12095.46

Other Income 14.22 44.75

Total Receipts 13071.53 12140.21

Total Expenses 13065.23 11986.71

Profit before tax 6.30 153.50

Income Tax 1.21 33.00

Deferred Tax 17.91 54.60

Fringe Benefit Tax - -

Profit after tax (12.81) 65.90

2. Business Performance

Your directors are pleased to report the Company''s business operations performance as follows:

Sales Revenue

During the year under review, the turnover of the Company was Rs. 13057.30 lac as against Rs. 12095.46 lac in 2012-13.

Profitability

The Company incurred a net loss after tax of Rs. 12.81 lacs during the current year against the net profit after tax of Rs. 65.90 lac in the previous year.

3. Management Discussion and Analysis Report

(a) Industry structure, Development & Future outlook

India''s textiles and clothing industry is one of the mainstays of the national economy. It is also one of the largest contributing sectors to Indian economy in terms of direct and indirect employment generation and net foreign exchange earnings. Textile sector contributes about 14% to industrial production, 4% to the gross domestic product (GDP), and 27 per cent to the country''s foreign exchange inflows. It provides direct employment to over 45 million people and second largest provider of employment after agriculture. Thus, the growth and all round development of this industry has a direct bearing on the improvement of the economy of the nation.

The Indian textiles industry accounts for about 24 per cent of the world''s spindle capacity and 8 per cent of global rotor capacity. The Cotton yarn production in India has increased by about 10 per cent during April

2013-February 2014 and the total cloth production grew by 3 per cent during the period April 2013–February 2014. The Man-Made Fibers (MMF) in Indian textile has successfully established its presence in almost all the countries across the globe. MMF production recorded an increase of 4% during the period April 2013 - February 2014.

The India''s cotton consumption grew by 12% to 4.8 million tons and is expected to grow by 7% to 5.4 million tons in 2014-15. World ending stocks are forecast to increase by 12 % in 2013-14 to 20 million tons, and then to expand by another 5% in 2014-15 to 21 million tons. The projected accumulation of cotton stocks will weight on international cotton prices in 2014-15, particularly as more stocks will be held outside of China.

In the global exports of Textiles, India has improved its ranking to emerge as the second largest textile exporter. Currently, India textiles exports worth US$ 40.2 billion, while the total global textiles exports stand at US$ 772 billion, with India commanding 5.2% of the share. The rise in textile exports from India is largely attributed to the growth in apparel and clothing sector as this account for almost 43% of the share. The Indian textile and apparel industry has potential to reach at size US$ 221 billion by 2021.

Since most of the capacity expansions have taken place in normal/ commodity products, the severity of competition and decrease in profit margins is inevitable. Thus, in order to survive, sustain and thrive in the global market, it would be necessary to differentiate and improve presence in vale added products in the near future. Further, Technical textile is expected to grow at a faster pace as compared to other textiles products. It would be prudent to be an early bird and earmark some investments for this area for better and sustainable profitability.

(b) Internal control systems & adequacy

Your Company has an adequate internal control system. There is a system of continuous Internal Audit which aims at ensuring effectiveness and efficiency of systems and operations. The report is reviewed by the Audit Committee of the Board consisting of Independent Directors. The scope of the Internal Audit is not limited to accounts only but includes operations, inventories, costing records, physical verifications of immovable and movable assets etc on regular basis. Further, the Company has also taken steps to develop a mechanism to assess and minimize risks by having a Risk Management Committee.

(c) Human resource management

Your Company gives utmost importance to human resource. It considers "Human Resource as Human Capital" and believes in the development of Human Resource. The Company strongly believes in the Performance Management System and always tries to explore and tap high potential at the Group level to meet new challenges and competition. Our main tool is training and developing talent at various levels. Internal and external trainings are regularly organized for the development of the members/employees.

(d) Safety, Health & Environment

The Company''s top priority is safety, with regard to employment. It encourages safety measures at all operational levels, especially at floor level. Regular training programs are conducted to create awareness about the importance of safety at work. Medical camps are organized periodically for welfare of the members. Additionally, regular medical facilities are also provided to them.

(e) Management perception of Risks & Concerns

The performance of textile industry during first three quarters of FY 2013-14 was quite encouraging. However, the last quarter witnessed sudden jerks in demand and price drop from export market, led by china. This was followed immediately by domestic market which adversely affected the market sentiment and profit margins. The upward serge in cotton prices and downward turn in yarn prices along with slack demand is going to hit the bottom line significantly.

To procure cotton more judiciously and carry reasonable inventory by reducing to 2 months instead of previous practices of 6 months shall help minimizing the risk. Further, initiatives towards differentiated/ value added products coupled with cost optimization will lead to better managing the profit margins.

(f) Opportunities and Threats

Opportunities:

1. Government thrust for textile export.

2. Scope for atomization.

3. Large overseas and domestic market. Threats:

1. Shortage of skilled labour.

2. Ever increasing cost of power & finance.

3. Volatile Government policies particularly for raw material.

(g) Financial Performance

Resource utilisation

a) Fixed assets

The gross fixed assets as at 31st March, 2014 were Rs. 5491.77 lac as against Rs. 5672.18 lac in the previous year. The Net block of assets as on 31st March, 2014 was Rs. 2408.25 lacs.

b) Current assets

Inventory levels as at 31st March, 2014 were Rs. 2401.79 lac as against Rs. 2972.90 lac in the previous year. The trade receivables as at 31st March, 2014 were Rs. 2260.62 lac as against Rs. 1356.97 lac in the previous year.

Financial condition & liquidity

Liquidity & capital resources (Rs. in lac)

Particulars 2013-14 2012-13

Cash & cash equivalents:

Beginning of the year 46.86 41.09

End of the year 43.06 46.86

Net cash provided (used) by:_

Operating Activities 535.82 558.14

Investing Activities (14.40) (150.71)

Financial Activities (525.22) (401.66)

7. Directors

During the year under review, Mr Mayank Malhotra was appointed as director of the Company and Mr Pawan Nagpal was appointed as Whole Time Director of the Company for a period of three years w.e.f. 01.09.2013. Mr.Rajinder Kumr and Mr.Raj Mittal resigned from the directorship of the company with effect from 24.09.2013 and 21.04.2014 respectively.

Mr. Mayank Malhotra, Director of the Company, is retiring by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re appointment.

Pursuant to Section 149 of the Companies Act, 2013, the Board at its meeting held on 13.08.2014 recommended appointment of Mr Sushil Kumar Singla and Mr.Rajan Dhawan as Independent Directors of the Company, not liable to retire by rotation for a period of five years till 31st March, 2019 subject to approval of the Members of the Company. These Directors have given the declarations to the Board that they meet the criteria of independence as provided under Section 149(6) of the said Act and also confirmed that they will abide by the provisions as mentioned in Schedule IV of the Companies Act, 2013. The Company has received requisite notices in writing from members proposing their appointment as Independent Directors.

9. Listing of securities

The Securities of the Company are listed on Bombay Stock Exchange Ltd (BSE).

10. Registrar and Share Transfer Agent

Beetal Financial & Computer Services (P) Ltd, Beetal house, 3rd Floor, 99 Madangir, Behind Local Shopping Centre, New Delhi -110062 is the Registrar and Share Transfer Agent of the Company.

11. Fixed Deposit

During the year, the Company has not accepted any deposits Section 58A & 58AA of Companies Act, 1956 and other related provisions read with the Companies (Acceptance of Deposit) Rules, 1975.

12. Dividend

The Board of Directors of your Company has not recommended any dividend for the financial year 2013-14.

13. Corporate Governance

The Company has in place a comprehensive system of Corporate Governance. A separate report on Corporate Governance forms part of the Annual Report of the Company. A certificate from the auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance.

14. Corporate Social Responsibility

Pursuant to Section 135 of the Companies Act, 2013 the Company has constituted the Corporate Social Responsibility (CSR) Committee of the Board of Directors. The terms of reference of the CSR Committee are as per the provisions of the Companies Act, 2013 read with rules made there under.

15. Auditors

M/s Sumat Gupta & Co, Chartered Accountants, Ludhiana, who are the Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting (AGM). It is proposed to re-appoint them to Statutory Auditors of the Company for three years to hold office from the conclusion of this AGM till the conclusion of the 36th AGM to be held in the year 2017 subject to ratification of their appointment at every AGM. M/s Sumat Gupta & Co have, under Section 139(1) of the Companies Act, 2013 and the Rules framed thereunder furnished a certificate of their eligibility and consent for re-appointment

16. Auditors'' Report

The Statutory Auditors of the Company have submitted Auditors'' Report on the Accounts of the Company for the financial year ended 31st March, 2014.

Auditors'' Report on the Accounts of the Company for the year under review is self-explanatory and requires no comments.

17. Statement of particulars of employees

Statement showing particulars of the employees as required by the provisions of Section 217(2A) of the Companies Act, 1956 is not given as no employee was in receipt of remuneration equal to or exceeding Rs. 60 lac per annum or Rs. 5 lac per month if employed for the part of the year.

19. Directors'' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

i) In preparation of the annual accounts, applicable accounting standards have been followed;

ii) Appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the profit of the Company for the year ended on 31st March, 2014;

iii) Proper and sufficient care has been taken 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;

iv) The annual accounts have been prepared on a going concern basis.

20. Acknowledgement

Your directors are pleased to place on record their sincere gratitude to the Government, Financial Institutions, Bankers and Business Constituents for their continued and valuable co-operation and support to the Company. They also take this opportunity to record their appreciation of the valuable contribution made by the employees in the successful operations of the Company during the year.

For and on behalf of the Board For HIMACHAL FIBRES LIMITED

Sd/- Place: Ludhiana (Akhil Malhotra) Dated: 05.09.2014 Chairman & Managing Director


Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting the 32nd Annual Report of your company together with the Audited Accounts for the period ended 31st March, 2013 comprising of period from 01.04.2012 to 31.03.2013.

1. FINANCIAL AND OPERATIONAL PERFORMANCE

Rs. In Lacs

2012-13 2011-12 (12 Months) (12 Months)

Sales 12095.46 10360.68

Other Income 44.75 24.19

Total Receipts 12140.21 10384.87

Total Expenses 11986.71 10159.56

Profit before tax 153.50 225.31

Income Tax 33.00 46.20

Deferred Tax 54.60 49.70

Fringe Benefit Tax

Profit after tax 65.90 129.41

During the year under review, the company has achieved a total Turnover of 12095.46 Lacs and Net profit of Rs.65.90 Lacs for the year ended on 31st March 2013.

2. DIVIDEND

Your directors regret their inability to propose payment of dividend for the period under review to conserve resources for the proposed modernization and expansion plans.

3. PROSPECTS

During the year under review, the company has also come out with allotment of 40,00,000 Equity shares to Promoters/promoter''s group. The special resolution for the same was passed by the Extra ordinary General Meeting dated 15.03.2012 by the shareholders of the company. The aforesaid shares were allotted on 21.05.2012 to the Promoters Group after getting the In Principle Approval from BSE.

The company has after the allotment of shares to Promoters/Promoters Group has also applied to SEBI for their approval of Open Offer to the existing Shareholders of the Company. Detailed Public announcement & Letter of offer was filed in SEBI & is also available on the SEBI''s website for the reference i.e. www.sebi.gov.in

Further the Promoter/Promoter''s Group have acquired 2,04,150 Equity shares by way of Open offer from the Public shareholders. Now the total Equity Shareholding of the Promoters/promoters Group is 47,04,150 equity shares representing 54.54% of Total Equity capital of the Company.

3. PUBLIC DEPOSITS

During the year under report, your Company has not accepted any deposits to which the provisions of Section 58A & 58AA and other relevant provisions of the Companies Act, 1956 and rules framed thereunder regarding acceptance of deposits from the public are applicable.

4. DIRECTOR''S RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, with respect to Director''s Responsibility Statement, it is hereby confirmed that:

i) in the preparation of the annual account the applicable accounting standards have been followed and there are no material departures from the same.

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

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

iv) The Directors have prepared the annual account on a ''going concern'' basis.

5. DIRECTORS

Shri Raj Mittal & Shri D S Rana, Directors retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment.

Shri Mayank Malhotra was appointed as an additional director by the Board of Director''s Administration committee w.e.f. 12th April, 2013 in the category of the Promoter as Non-Executive Director. The Company has received a notice in writing from a member signifying his candidature for the office of the director of the Company. The Board recommended for his appointment.

6. AUDIT COMMITTEE

Pursuant to Section 292A(1) of the Companies Act, 1956 and provisions of the Listing Agreement of the Stock Exchange, the company has already constituted Audit Committee consisting of Shri Sushil Singla, Director as Chairman, Shri Raj Mittal, Director & Shri Akhil Malhotra, Managing Directors as members. The committee met Four times during the period under review.

7. REMUNERATION COMMITTEE

The remuneration committee comprises of three Directors viz. Shri Sushil Singla as Chairman, Shri Raj Mittal and Shri Rajan Dhawan as members. All are Independent non-executive Directors. Broad terms of reference of the Remuneration Committee include recommendation to the Board on salary/perquisites, commission and retirement benefits and finalization of the perquisite package payable to the company''s Managing Director/ Whole-time/ Executive Directors.

8. CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance Code as stipulated under the Listing Agreement with the Stock Exchange(s) during the year under review. A separate section on Corporate Governance alongwith certificate from the Auditors confirming the compliance is annexed and forms part of the Annual Report.

9. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management discussion and analysis is annexed hereto as a separate statement in the Annual Report.

10. PARTICULARS OF EMPLOYEES UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956

The Company had no employee who was in receipt of remuneration during the year under report, which in the aggregate was equal to or more than such sum as is prescribed under Section 217 (2A ) of the Companies Act, 1956.

11. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE

The information as required by 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 relating to conservation of energy and technology absorption are annexed hereto and form part of this report.

12. AUDITORS & AUDITOR''S REPORT

The retiring auditors M/S Sumat Gupta & Co., Chartered Accountants are eligible for re-appointment for the year 2013-14. They have furnished a certificate in terms of section 224(1B) of the Companies Act, 1956 certifying their eligibility to continue as auditors, if re-appointed.

The observations made in the Auditor''s Report are self explanatory in nature.

13. COST AUDITORS

M/s J.Verma & Associates, Cost Accountants have been appointed to conduct Cost Audit of the Company for the Financial Year 2013-14. Due date of filing for the Financial Year 2012-13 will be 27.09.2013 & the Cost Audit Report for the financial Year 2011-12 in Form-1 was filed on 28.02.2013 vide its Challan No- S20427522 due date of which was extended to 28.02.2013 by Ministry of Corporate Affairs.

14. ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the support and co-operation extended by Central and State Governments, Employees and Banks, Customers and business associates of the Company and confidence reposed by the Shareholders.

For and on behalf of the Board

For HIMACHAL FIBRES LIMITED

Sd/- Sd/-

Place: Ludhiana AKHIL MALHOTRA RAJINDER KUMAR

Dated: 28.05.2013 Managing Director Whole Time Director


Mar 31, 2012

The Directors have pleasure in presenting the 31st Annual Report of your company together with the Audited Accounts for the period ended 31st March, 2012 comprising of period from 01.04.20011 to 31.03.2012.

1. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

To avoid duplication and overlap between Directors Report and a separate Management Discussion and Analysis, this Report includes the Management Discussion and Analysis as appropriate.

1.1 FINANCIAL AND OPERATIONAL PERFORMANCE

Rs. In Lacs 2010-11 2011-12 (12 Months) (12 Months)

Sales 10017.31 10360.68

Other Income 45.98 24.19

Total Receipts 10063.29 10384.87

Total Expenses 9823.27 10159.56

Profit before tax 240.02 225.31

Income Tax 47.80 46.20

Deferred Tax 15.01 49.70

Fringe Benefit Tax - -

Profit after tax 177.21 129.41

During the year under review, the company has achieved a total Turnover of 10360.68 Lacs and Net profit of Rs. 129.41 Lacs for the year ended on 31st March 2012.

1.2 NDUSTRYSTRUCTURE AND DEVELOPMENTS

The company is into Spinning and Dyeing of cotton and blended yarn. The Indian Textile Industry has an overwhelming presence in the economic life of the country. India is Second largest producer of cotton in the world and textile industry is second largest employer in India (after agriculture) - Direct Employment to 35 million People. Currently it contributes 2% to GDP, 11.50% to industrial production and constitutes 13% of India's exports.

Yarn is used by various textile mills/ knitting & weaving industry in the country. The domestic yarn markets would continue to be functioning normally as large weaving capacities have come up in the country.

1.3 STRENGTH & OPPORTUNITIES-ANALYSIS

A systematic analysis of the textile and apparel industry in India indicates the following:- STRENGTH

Raw material base-India has high self sufficiency for raw material particularly natural fibers. India's cotton crop is the third largest in the world. Indian textile Industry produces and handles all types of fibres.

Labour-Cheap labour and strong entrepreneurial skills have always been the backbone of the Indian Apparel and textile Industry.

Flexibility-The small size of manufacturing which is predominant in the apparel industry allows for greater flexibility to service smaller and specialized orders.

Rich Heritage-The cultural diversity and rich heritage of the country offers good inspiration base for designers. OPPORTUNITIES

Indian Textiles-Vision 2020- The current domestic Textile and apparel market of US$ 47 bn is expected to grow @ 11% annually to reach US$ 140 bn by 2020. The main drivers of domestic growth are increasing population, increasing income levels, rapid urbanization, improving demographics, increased organized players and increasing penetration of retailers into smaller cities.

Export potential- India has the potential to increase its export share in world trade from the current 4.5% to 8.00% by 2020. The high growth for Indian exports is possible due to increased sourcing shift from developed countries to Asia and India's strengths as a suitable alternative to China for global buyers.

Shifting of production base- Over the years, production has converged towards Asia from western countries

1.4 SEGMENT-WISE PERFORMANCE

The company operates only in one segment “Cotton & Blended Yarn' and hence segment-wise reporting is not required.

1.5 FUTURE OUTLOOK

The global textile and apparel industry is reviving after the recent global recession with increasing consumer demand. With the positive outlook the global textile and apparel trade has the potential to grow up to USD 800 bn. by 2015 from about USD 510 bn. in 2009.

The Indian textile industry is expected to grow to USD 134 bn. by 2015 from present size of USD70 bn.

In the last 5 years, the total market size of the Indian textile industry has grown by about 10% annually. The industry is expected to grow further at a much higher pace primarily driven by strong domestic consumption which has remained robust despite the recent global economic down turn

Therefore, with the growing demand both in the domestic market and international market for the Indian products the company looks forward to expand its activities in near future.

1.6 GENERAL BUSINESS OUTLOOK

In the 1st half of FY 12, Domestic OTC demands were good and off take from wholesale were buoyant. However in the 2nd half of FY12 retail off take weakened due to poor market sentiments. In the export market, slow down in US and Europe, withdrawal of DEPB and reduced drawback rates impacted demand.

With exports becoming less attractive, we see competition to increase in domestic market as most of the exporters will substitute the exports with domestic sales.

The major domestic RMG players are not projecting high growth in FY13. The export market scenario is expected to continue to be weak due to recessionary trends.

In view of the above we expect the growth for our business to be moderate in FY13.

1.7 INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has a system of internal controls in place to ensure that all the transactions are properly recorded and authorised.

1.8 HUMAN RESOURCES

The company is of firm belief that the Human Resources are the driving force that propels a company towards the progress and success. The Industrial relations continued to remain cordial during the year under review.

2. DIVIDEND

Your directors regret their inability to propose payment of dividend for the period under review to conserve resources for the proposed modernization and expansion plans.

3. PROSPECTS

Company has made preferential issue of 11,20,0000 Equity shares to other than Promoters/ Promoters Group for the company's modernization and further augmentation of the company's operation during the financial Year 2011-12.

During the year under review company has also came out with allotment of 40,00,000 Equity shares to Promoters/promoter's group, the special resolution for the same was passed by the Extra ordinary General Meeting dated 15.03.2012 by the shareholders of the company. The aforesaid shares were allotted on

21.05.2012 to the Promoters Group after getting the In Principle Approval from BSE for the same.

Company has after the allotment of shares to Promoters/Promoters Group has also applied to SEBI for their approval of Open Offer to the existing Shareholders of the Company. Detailed Public announcement & Letter of offer is filed with SEBI & also available on the SEBI's website for the reference.

4. DIRECTOR'S RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, with respect to Director's Responsibility Statement, it is hereby confirmed that:

i) in the preparation of the annual account the applicable accounting standards have been followed and there are no material departures from the same.

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

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

iv) The Directors have prepared the annual account on a ‘going concern' basis.

5. DIRECTORS

Shri Sushil Singla and Shri Rajan Dhawan, Directors retire by rotation at the ensuing Annual General Meeting and being eligible offers themselves for re-appointment.

None of the Directors of your company is disqualified under section 274(1) (g) of the Companies Act, 1956.

6. AUDIT COMMITTEE

Pursuant to Section 292A(1) of the Companies Act, 1956 and provisions of the Listing Agreement of the Stock Exchange, the company has already constituted Audit Committee consisting of Shri Sushil Singla, Director as Chairman, Shri Raj Mittal & Shri Akhil Malhotra, Managing Directors as members. The committee met Four times during the period under review.

7. REMUNERATION COMMITTEE

The remuneration committee comprises of three Directors viz. Shri Sushil Singla as Chairman, Shri Raj Mittal and Shri Rajan Dhawan as members. All are Independent non-executive Directors. Broad terms of reference of the Remuneration Committee include recommendation to the Board on salary/perquisites, commission and retirement benefits and finalization of the perquisite package payable to the company's Managing Director/ Whole-time/ Executive Directors.

8. CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance Code as stipulated under the Listing Agreement with the Stock Exchange(s) during the year under review. A separate section on Corporate Governance alongwith certificate from the Auditors confirming the compliance is annexed and forms part of the Annual Report.

9. REQUIREMENT U/S 217 OF THE COMPANIES ACT, 1956

Additional information regarding the Conservation of energy, Technology absorption and Foreign Exchange earnings and outgo as required U/S 217 (1) (e) of the Companies Act, 1956 is annexed and forms a part of this report.

There were no employees within the meaning of section 217(2A) of the Companies Act, 1956.

10. AUDITORS & AUDITOR'S REPORT

The retiring auditors M/S Sumat Gupta & Co., Chartered Accountants are eligible for re-appointment for the year

2011-12. They have furnished a certificate in terms of section 224(1B) of the Companies Act, 1956 certifying their eligibility to continue as auditors, if re-appointed.

The observations made in the Auditor's Report are self explanatory, however a qualification under section 297 has been made, for which the Board has given following explanations/ informations as per section 217(3) of the Companies Act, 1956:

The Hon'ble Board for Industrial & Financial Reconstruction (BIFR) has vide their order dated 21.07.2009 sanctioned the Rehabilitation Scheme for the revival of the company. Therefore the major Suppliers/ Creditors were unwilling to deal with the Sick Company or they are dealing cautiously with the Company. Therefore to smoothen the functioning and operations of the Company, It was constrained to have related party transactions

i.e. sale, purchase or supply of any goods, material or services etc with the Group Companies/ companies under the common control. However the transactions taken place are reasonable having regard to prevailing market prices at the relevant time.

11. COST AUDITORS:

M/s J.Verma & Associates, Cost Accountant has been appointed to conduct Cost Audit of the Company for the Financial Year 2012-13. Due date of filing for the Financial Year 2011-12 will be 27.09.2012 & the Cost Audit Report for the financial Year 2010-11 in Form-1 was filed on 22.09.2011 vide its Challan No- B20993093 due date of which was 27.09.2011.

12. ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the support and co-operation extended by Central and State Governments, Financial Institutions and Banks, Customers and business associates of the Company, and confidence reposed by the Shareholders.

By order of the Board For HIMACHAL FIBRES LIMITED

Sd/- Sd/-

Place: Ludhiana AKHIL MALHOTRA RAJINDER KUMAR

Dated: 13.08.2012 Managing Director Whole Time Director


Mar 31, 2010

The Directors have pleasure in presenting the Twenty Ninth Annual Report of your company together with the Audited Accounts for the period ended 31st March, 2010 comprising of 6 months from 01.10.2009 to 31.03.2010.

1.1 FINANCIAL AND OPERATIONAL PERFORMANCE

Rs (). In Lacs

2009-10 2008-09

(6 Months) (18 Months)

Sales 513.23 11758.44

Other Income 15.08 196.25

Total Income 4461.40 11954.69

Profit for the year 408.71 651.36

-Less

Interest & Finance Charges 196.17 480.03

Profit before tax 212.54 171.34

Deferred Tax - 0.00

Fringe Benefit Tax - 1.03

Profit after tax 212.54 170.31



During the year under review, the company has total Turnover of 5206.338 MT Cotton & Blended Yarns including Polyster Fibre & Knitted Cloth as against 6145.87 MT in the previous year ended 30.09.2009.

2. DIVIDEND

Since the rehabilitation of the company is under process, your directors regret their inability to propose payment of dividend for the period under review.

3. PROSPECTS

The Honble Board for Industrial & Financial Reconstruction (BIFR) has vide their order dated 21.07.2009 - sanctioned the Rehabilitation Scheme for the revival of the company. As per the sanctioned scheme, the existing paid-up Equity Share Capital has been reduced by 50% by way of reduction of face value of each equity share from Rs. 10/- to Rs. 5/- each per share and thereafter consolidation of two equity shares of Rs. 5/-.each into one equity share of Rs. 10/- each.

Further, as per the sanctioned scheme, the company has made preferential allotment in favour of the promoters/ associates to the tune of Rs. 1,50,25,000/- divided into 15,02,500 equity shares of Rs. 10/- each against their share application money towards their contribution in the equity share capital of the company. The same was utilized for the payment towards OTS dues of the secured creditors and is part of the - sanctioned scheme of Honble BIFR.

Further, the Honble Board for Industrial & Financial Reconstruction (BIFR) has vide their order dated 12.05.2010, has instructed to induct two Strategic Investor/ Co-Promoters i.e Shri. Akhil Malhotra & Shri.Rajinder Kumar and to issue equity shares of worth Rs.50 Lacs.

During the period under review, the company has issued 50,00,000 (Fifty Lacs only) Equity Shares of Rs. 10/- each to the Strategic Investor/ Co-Promoters against the share application/ Allotment money received towards their contribution in the revival of the company.

4. AUDITED FINANCIALS OF SIX MONTHS PERIOD ENDED i.e 01.10.2009 to 31.03.2010

The company had received approval from the concerned R.O.C. under section 210(4) of the Companies Act, 1956 for the extension of the last Financial Year of the company for a period of 6 months i.e. upto 30th September, 2009 with a view to present the latest position on the affairs of the company by way of implementation of the sanctioned scheme. Accordingly, the audited accounts had been prepared for a period of 18 months i.e. from 01.04.2008 to 30.09.2009.

The company had also received approval regarding extension for holding the Annual General Meeting of the company for the year 2009 upto 29th December, 2009 u/s 166(1) of the Companies Act, 1956.

Therefore the Company now has prepared the Audited Financials for the remaining period of six months i.e 01.10.2009 to 31.03.2010.

5. DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that:

i) in the preparation of the annual accounts the applicable accounting standards have been followed and there are no material departures from the same.

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

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

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

6. DIRECTORS

Shri Sanjay Goel and Shri Raj Mittal, Directors retire by rotation at the ensuing Annual General Meeting an being eligible offers themselves for re-appointment.

Shri Suraj Prakash Setia and Shri Sita Ram Singla, Directors has resigned from the Directorship w.e. 05.04.2010 due to personal reasons. The Board places on record its appreciation for the services rendere during their tenure as Director of the company.

Shri Rajinder Kumar, Shri Sushil Singla Shri Rajan Dhawan, Shri Rahul Kalia & Shri Daljeet Singh Ran appointed as Additional Directors of the Company during the year. Approvals of the members are required for the appointment of additional Directors in the ensuing Annual General Meeting as a Director of the Company None of the Directors of your company is disqualified under section 274(1) (g) of the Companies Act, 1956.

7. AUDIT COMMITTEE

Pursuant to Section 292A(1) of the Companies Act, 1956 and provisions of the Listing Agreement of the Stock Exchange, the company has already constituted Audit Committee consisting of Shri Raj Mittal, Shri Sush Singla, Shri Rajan Dhawan, Shri. Akhil Malhotra & Shri.Rajesh Gupta as members. The committee met Thre times during the period under review.

8. REMUNERATION COMMITTEE

The remuneration committee comprises of three Directors viz. Shri Sushil Singla as Chairman, Shri Raj Mitts and Shri Rajan Dhawan as members. All are non-executive Directors. Broad terms of reference of the Remuneration Committee include recommendation to the Board on salary/perquisites, commission any retirement benefits and finalization of the perquisite package payable to the companys Managing Director Whole-time/ Executive Directors.

9. MANAGEMENT COMMITTEE

In accordance with para 17 (ii) of the rehabilitation scheme sanctioned by the Honble BIFR, the company ha constituted a Management Committee (MC) of the company comprising Shri Rajesh Gupta, Director, Shri K.L Garg, DGM-IDBI Bank, Shri Ajai Singh, Special Director, BIFR and Shri Ashwani Garg, Generz Manager/CFO of the company.

10. CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance Code as stipulated under the Listing Agreemer with the Stock Exchange(s) during the year under review. A separate section on Corporate Governana alongwith certificate from the Auditors confirming the compliance is annexed and forms part of the Annus Report.

11. REQUIREMENT U/S 217 OF THE COMPANIES ACT, 1956

Additional information regarding the Conservation of energy, Technology absorption and Foreign Exchange earnings and outgo as required U/S 217 (1) (e) of the Companies Act, 1956 is annexed and forms a part o this report.

There were no employees within the meaning of section 217(2A) of the Companies Act, 1956.

12. AUDITORS & AUDITORS REPORT

The retiring auditors M/S Sumat Gupta & Co., Chartered Accountants are eligible for re-appointment for the year 2010-11. They have furnished a certificate in terms of section 224(1B) of the Companies Act, 1956 certifying their eligibility to continue as auditors, if re-appointed.

The observations made in the Auditors Report are self explanatory, however a qualification under section 297 has been made, for which the Board has given following explanations/ informations as per section 217(3) of the Companies Act, 1956.

The Honble Board for Industrial & Financial Reconstruction (BIFR) has vide their order dated 21.07.2009 sanctioned the Rehabilitation Scheme for the reviyal of the company. Therefore the major Suppliers/ Creditors are unwilling to deal with the Sick Company or they are dealing cautiously with the Company. Therefore to smoothen the functioning and operations of the Company, It was constraint to have related party transactions i.e. sale, purchase or supply of any goods, material or services etc with the Group Companies/ companies under the common control. However the transactions taken place are reasonable having regard to prevailing market prices at the relevant time.

13. ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the support and co-operation extended by Central and State Governments, Financial Institutions and Banks, Customers and business associates of the Company, and confidence reposed by the Shareholders.



By order of the Board

For HIMACHAL FIBRES LIMITED

Sd/- Sd/- Place: Ludhiana RAHUL KALIA RAJESH GUPTA

Dated: 30.07.2010 DIRECTOR DIRECTOR