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Directors Report of Himatsingka Seide Ltd.

Mar 31, 2016

The Directors are pleased to present the Thirty First Annual Report on the operations and performance of your Company, together with audited financial statements and auditors'' report for the year ended March 31, 2016.

1. Business Operations Overview

The financial highlights for the year under review are given below:

(Rs. in Lakhs)

Particulars Standalone Consolidated

2015-16 2014-15 Change % 2015-16 2014-15 Change %

Revenue 102,066 94,841 7.6% 188,684 194,316 -2.9%

Other Income 4,155 3,728 11.5% 2,006 2,088 -3.9%

Material cost 54,588 54,530 0.1% 112,422 125,121 -10.1%

% to Revenue 53.5% 57.5% 59.6% 64.4%

EBITDA 28,162 18,981 48.4% 31,205 22,153 40.9%

EBIT 24,526 15,439 58.9% 26,338 17,689 48.9%

Profit before exceptional items 18,403 10,934 68.3% 16,923 9,145 85.1%

Exceptional items - - - -

Profit before tax 18,403 10,934 68.3% 16,923 9,145 85.1%

Profit after tax 17,798 10,934 62.8% 16,660 9,544 74.6%

In the Fiscal year 2015-16 the Consolidated Revenue marginally declined by 2.9% to Rs. 188,648 Lakhs and EBITDA grew by 40.9% to Rs. 31,205 Lakhs. The increase in EBITDA was driven mainly by optimization of costs and increase in operational efficiency across the group through various initiatives. Prices of critical raw-material inputs remained stable through the year.

Prospects

Growth and efficiency initiatives during the year

During the year 2015-16 the company made significant progress on various initiatives relating to its Manufacturing and Distribution business. Some of the initiatives that helped bring additional clarity and operating efficiencies in the business model include

- Significantly enhanced operational efficiencies in manufacturing

- Focused on the optimization of Product Portfolio

- Achieved change of status from SEZ / EOU to DTA for manufacturing divisions

- Consolidated and enhanced revenue streams from Brand Portfolio in key markets

- Merged operating entities in North America to streamline group corporate structure

- Announced Rs.1300 Crores of fresh investments to be made to augment manufacturing capacities and capabilities

- Made significant progress in turning around European division

Subsidiary Companies

As on March 31, 2016, the Company had the following subsidiaries:

- Himatsingka Wovens Private Limited,

- Himatsingka Holdings NA Inc.,

- Himatsingka America Inc.,

- Giuseppe Bellora S.r.l.

- Himatsingka Singapore Pte. Limited,

- Twill & Oxford LLC.

With effect from 1st August, 2015 the Group''s holding company in North America has been renamed Himatsingka Holdings NA Inc. In addition, the two operating subsidiaries Divatex Home Fashions Inc and DWI Holdings Inc have been merged and renamed as Himatsingka America. Inc.

There has been no material change in the nature of business of these subsidiaries.

As required under section 129(3), the Company has prepared consolidated financial statements which form a part of the Annual Report.

The consolidated financial statements presented by the Company include the financial results of its subsidiary companies. Further, a statement containing the salient features of the financial statements of its subsidiaries in form AOC-1 is annexed to this report as Annexure 1

Pursuant to section 136 of the Companies Act, 2013, the audited financial statements of the subsidiaries are available on the Company''s website at http://www.himatsingka.com/financial-information.html. The Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are kept for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Company will make available the annual accounts of the subsidiary companies and the related information to any member of the Company who may be interested in obtaining it.

As required under Clause 49 of the listing agreement and Regulation 24 of SEBI (Listing Obligations and disclosure requirements) Regulations, 2015, the Company has drafted a policy for determining material subsidiaries. The policy has been disclosed in the Company''s website and can be found at http://www.himatsingka.com/corporate-governance. html

Research and Development

Research and development continues to provide valuable support to our business and has helped us to keep pace with dynamic market conditions. We continue to give in-house research and innovation the highest priority.

Environment, Safety, Energy conservation and Technology absorption

Safety and environmental protection remain a key area of focus for the Company. Investments are continuously made in projects that reduce / treat waste and increase energy efficiencies. We regularly upgrade our effluent treatment and water recycling plants to keep abreast with technological advancements. By avoiding carcinogenic azo class dyes, we ensure eco- friendly production and worker safety. Our endeavor has been to maximize the efficient use of energy and ensure the safe and responsible discharge of residual wastes, while minimizing any adverse environmental impact and waste generation.

2. Dividend

Your Directors in their meeting held on 11th March, 2016 declared an interim dividend of 20% (Rs. 1.00 per equity share). Further your Directors in their meeting held on 21st May, 2016 recommended a final dividend of 30% (Rs. 1.50 per equity share) for the financial year ended 31st March, 2016, subject to approval by the shareholders at the Annual General Meeting.

3. Transfer to Reserves

The Company proposes to transfer an amount of Rs. 400 Lakhs to the Debenture Redemption Reserve. Subsequently, an amount of Rs. 800 Lakhs has been moved back from Debenture Redemption Reserve to General Reserve following the redemption.

4. Extract of Annual Return

In accordance with the Section 92(3) and as required under the section 134(3)(a), the extract of the Annual Return of the Company for the year ended 31st March, 2016 is annexed here to as Annexure 2 in the prescribed form MGT-9.

5. Number of meetings of the Board

The details of the meetings of the Board and the details of the attendance of the directors in the meetings are provided in the Corporate Governance Report.

6. Directors'' Responsibility Statement

As required by the provisions of Section 134(3)(c) of the Companies Act, 2013, the Directors'' Responsibility Statement is attached as Annexure 3, forming part of this report.

7. Declaration by Independent Directors

The Company has received from each of its Independent Directors, the declaration as stipulated under Section 149(7) of the Companies Act, 2013, confirming that the director meets the criteria of independence as laid down under section 149(6) of the Companies Act, 2013.

8. Nomination and Remuneration Policy

The Company has formed a Nomination and Remuneration Committee as required under the Section 178 of the Companies Act, 2013. The Committee has formulated a policy as required under Section 178(3) of Companies Act, 2013 stipulating the criteria for determining qualifications, positive attributes and independence of a director and also the criteria relating to the remuneration for the directors, key managerial personnel and other employees. The aforesaid policy is annexed to the Boards'' report as Annexure 4.

9. Auditors and Auditors'' Reports Statutory Audit

The Company at its 29th Annual General Meeting held on 23rd September, 2014 appointed M/s Deloitte Haskins and Sells, Chartered Accountants to hold office till the conclusion of 32nd Annual General Meeting, subject to ratification by the members at every AGM. The report of Statutory Auditors (appearing elsewhere in the Annual Report) does not have any qualifications/ adverse remarks.

Secretarial Audit

The Company had appointed Mr. Vivek Bhat, Company Secretary in Practice, Bengaluru, to conduct the secretarial audit as required under Section 204 of the Companies Act, 2013. The secretarial audit report given by Mr. Vivek Bhat is appended as Annexure 5 to the Boards'' Report.

In the above mentioned report, Mr. Vivek Bhat has made the following comment:

"The company could not spend the eligible profit on Corporate Social Responsibility measures. However the Company has constituted the CSR Committee and its constitution was as per the regulation."

Boards'' Response

The Company started two initiatives under Corporate Social Responsibility. One of which was providing "SMART CLASS ROOMS" for the Government Schools around the plant in Hassan in partnership with CLT India (Children''s Lovecastles Trust), an organization that endeavors providing access to quality education for every child anywhere through e-learning system in rural high schools.

Another initiative was to provide assistance to Deepshikha, an Institute for Child Development and Mental Health to their school which provides special education to children.

As per the provisions, the total amount to be spent by the Company on CSR activities for the FY 2015-16 was Rs. 150.40 Lakhs. During the year, an amount of Rs. 77 Lakhs was spent by the Company.

10. Particulars of Loans, Guarantees, Investments and Securities made

The particulars of loans made, guarantees given, investments made and securities provided as per the provisions of Section 186 of the Companies Act, 2013 and the relevant rules made thereunder are given in the Notes to the standalone financial statements.

11. Particulars of Contracts or arrangements with related parties

All transactions entered into by the Company with its related parties are at arm''s length and in the ordinary course of business. However, the list of material related party transactions as per the Company''s policy on related party transactions, as required under rule 8(2) of Companies (Account) Rules, 2014, is annexed to the Boards'' Report as Annexure 6.

The Company has also formulated a policy on dealing with Related Parties Transactions as required under Clause 49 of Listing Agreements and Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The same is available in the Company''s website at http://www.himatsingka.com/corporate-governance. html.

12. Material changes

No material changes or commitments affecting the financial position of the Company have occurred after the closure of the financial year till the date of this report.

13. Exit from EOU & SEZ

The Drapery and Upholstery unit of the Company which was operating as 100% Export Oriented Unit (EOU) has exited out of EOU on November 5, 2015 and currently operates as a Domestic Tariff Area Unit (DTA). The final exit order from Office of the Development Commissioner, Cochin Special Economic Zone (CSEZ) dated November 05, 2015 has been received by the Company on 13th November, 2015.

Bed Linen unit of the Company at Hassan which was operating as Special Economic Zone (SEZ) has exited out of SEZ and currently operates as a Domestic Tariff Area Unit (DTA). The Official Memorandum dated 27th January, 2016 along with final exit Notification from Ministry of Commerce and Industry, Department of Commerce, SEZ Section has been received by the Company.

14. Conservation of energy, Technology absorption & Foreign exchange

The details of conservation of energy, technology absorption and foreign exchange are annexed to the Boards'' Report as Annexure 7.

15. Risk Management

The Company has developed and implemented a comprehensive risk management policy and framework to counter and mitigate the various risks encountered by the Company. The details of the same are given in the Risk Management section elsewhere in this Annual Report.

16. Corporate Social Responsibility

The Corporate Social Responsibility (CSR) committee consists of the following directors:

Sl. No. As on 31st March, 2016 w.e.f., 21st May, 2016

1 Dr. K R S Murthy Dr. K R S Murthy

2. Mr. A K Himatsingka NA

3. Mr. D K Himatsingka Mr. D K Himatsingka

4 . Mr. Shrikant Himatsingka Mr. Shrikant Himatsingka

The Committee has devised the CSR policy as required under Section 135 of the Companies Act, 2013 and the relevant rules made thereunder. As per the provisions, the total amount to be spent by the Company on CSR activities for the FY 2015-16 was Rs. 150.40 Lakhs.

During the year, an amount of Rs. 77 Lakhs was spent by the Company. The details of the CSR policy and the CSR spending have been elaborated in the Annexure 8 to this report.

17. Board Performance Evaluation

The Company has, during the year, conducted an evaluation of the Board as a whole, its committees and the individual directors including the independent directors as stipulated in the Nomination and Remuneration policy adopted by the Company. The evaluation was carried out through different evaluation forms which covered among others the evaluation of the composition of the Board/ committee, its effectiveness, activities, governance, and with respect to the chairman and the individual directors, their participation, integrity, independence, knowledge, impact and influence on the Board.

The independent directors of the Company also convened a separate meeting and evaluated the performance of the Board, the non-independent directors and the chairman.

18. Directors and Key Managerial Personnel

The Board of Directors at its meeting held on 30th January, 2016 changed the designation of Mr. Shrikant Himatsingka as Executive Director and CEO from Executive Director.

The Board of Directors at its meeting held on 21st May 2016 appointed Mr. D.K. Himatsingka as Executive Chairman of the Company and appointed Mr. Shrikant Himatsingka as Managing Director & Chief Executive Officer of the Company.

The Board also appointed Mr. Vasudevan V as an Additional Director designated as Executive Director of the Company and appointed Ms. Sangeeta Kulkarni as Additional Director (Independent) of the Company with effect from 21st May, 2016. Pursuant to relevent provisions under Companies Act, 2013 the same has to be ratified by the shareholders in the ensuing Annual General Meeting, and it is proposed to appoint the Independent Director and the Executive Director for a period of 5 years.

In accordance with the provisions of the Companies Act, 2013, and Articles of Association of the Company, Mr. Aditya Himatsingka retires by rotation and being eligible, offers himself for re-appointment. His re-appointment will be placed as one of the agenda in the ensuing Annual General Meeting.

Retirements and Resignations

- Mr. Dilip J Thakkar resigned as Director and Chairman of the Company with effect from 21st May, 2016.

- Ms. Jayshree Poddar resigned as Director of the Company with effect from 22nd May, 2016 and shall continue as Head of Designs in the Company,

- Mr. A.K. Himatsingka resigned as Director and Vice Chairman of the Company with effect from 22nd May, 2016.

Your Directors wish to place on record their deep appreciation for the outstanding contributions and services rendered by Mr. Dilip J Thakkar, Mr. A. K. Himatsingka and Ms. Jayshree Poddar during their tenure as Directors of the Company,

19. Composition of Audit Committee

The Company has constituted an Audit Committee as required under the Companies Act, 2013. The committee consists of the following directors:

Sl. No As on 31st March, 2016 W.e.f., 21st May 2016

1. Mr. Dilip J Thakkar Mr. Rajiv Khaitan

2. Dr. K R S Murthy Dr. K R S Murthy

3. Mr. Rajiv Khaitan Mr. Berjis M Desai

4. N.A. Mr. Shrikant Himatsingka

During the year, there have been no incidents where the Board has deviated from the recommendations made by the committee.

20. Vigil Mechanism

As a conscious and vigilant organization, Himatsingka Seide Limited believes in the conduct of the affairs of its constituents in a fair and transparent manner, by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour.

In its endeavour to provide its employee a secure and a fearless working environment, the Company has established a "Whistle Blower Policy" as required under the Companies Act, 2013 and the same is also available in the Company''s website.

Mr. Ashok Sharma, Company Secretary, has been designated as the Chief Compliance Officer under the policy and the employees can report any instance of unethical behaviour, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy to him.

In exceptional cases, where the Whistle Blower is not satisfied with the outcome of the investigation and the decision, she/ he can make a direct appeal to the Chairman of the Audit Committee and the contact details of the Chairman is also given in the Policy.

During the year, no complaints were received under this mechanism.

21. Remuneration of Directors and Key Managerial Personnel

a) Details of Directors'' remuneration

Rs. in Lakhs

Ratio to Sitt ing Salaries Median Percen tage Director DIN and Commi ssion Total increase over

fees remuner ation perqui sites previous year of employees

Dilip J Thakkar 00007339 1.20 Nil 14.00 15.20 14.56 : 1 36.94%

A K Himat singka 00183698 0.40 Nil 12.00 12.40 11.88 : 1 18.09%

Rajiv Khaitan* 00071487 1.50 Nil 7.00 8.50 8.14 : 1 37.10%

Dr. K R S Murthy 00167877 1.60 Nil 7.00 8.60 8.24:1 34.37%

Berjis M Desai 00153675 0.30 Nil 7.00 7.30 6.99 : 1 43.14%

D K Himat singka 00139516 Nil 112.62 206.25 318.87 305.54 : 1 19.14%

Shrikant Himat singka 00122103 Nil 72.82 206.25 279.07 258.78 : 1 18.53%

Aditya Himat singka 00138970 Nil 56.55 85.00 141.55 135.63 : 1 16.16%

Jayshree Poddar* 07091651 Nil 33.74 30.00 63.74 61.07 : 1 1032. 15%

* Ms. Jayshree Poddar was appointed as a director w.e.f. March 1,2015.

* Paid to Khaitan & Co.,

In the remuneration mentioned above, the sitting fees, salaries and perquisites form the fixed component of the total remuneration and the commission is a variable component linked to the performance of the Company,

b) Details of the Remuneration of the Key Managerial Personnel (other than Directors mentioned above)

Key Managerial Designation Total Remuneration Percentage increase Personnel (Rs. In Lakhs) over previous year

K P Pradeep President - Finance and Group CFO 139.92 19.15%

AVP - Treasury, Taxation & Company

Ashok Kumar Sharma 52.16 33.16% Secretary

c) The percentage increase in median remuneration of the employees is 11.84%

d) The number of permanent employees in the rolls of the Company is 3,066

e) The key parameters for the variable component of remuneration availed by the directors are the amount of responsibilities taken, performance of the business, specific contribution made by the director to the overall performance of the Company,

f) During the year, there were no employees whose remuneration was higher than that of the highest paid director.

g) Statement of particulars of employees as required under rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

Name of the Date of Remune- Qualification Experience Employee ration (Rs.) joining

D K Himatsingka 31,887,265 B.A. (Hons.) 41 years 1-Aug-85



Shrikant Himatsingka 27,907,458 B.S. (Econ.) 14 years 15-May-01

Aditya Himatsingka 14,154,927 B.Com. (Hons.) 29 years 1-Jan-88

Diploma in Textiles

Pradeep K P 13,992,628 ACA, AICWA, 22 years 2-Nov-07 B.Com.

Vasudevan V 11,920,116 B.Sc. 36 years 14-Feb-13

Wilson Maria Doss YR 11,344,636 MSW 30 years 1-Sep-06

Name of the Employee Age Previous employment

D K Himatsingka 67 Managing Director, Bihar Mercantile Union Ltd.

Shrikant Himatsingka 36 -

Aditya Himatsingka 52 -

Pradeep K P 45 Director Finance, Fidelity Business Services India Ltd

Vasudevan V 60 Vice President- Raymond Zambaiti

Wilson Maria Doss YR 57 Vice President Human Resources Arvind Brands Ltd

22. Corporate Governance

We comply with the corporate governance code as prescribed by the stock exchanges and SEBI. You will find a detailed report on corporate governance as part of this annual report. The auditor''s certificate on compliance with the mandatory recommendations on corporate governance is annexed to this report as Annexure - 9.

23. Insurance

The Company''s assets are prone to risks / peril. The major risks / peril are adequately insured.

24. Public Deposits

The Company has not accepted any deposits from the public during the year within the meaning of the Companies Act, 2013.

25. Cost Auditors

The Companies (Cost Records and Audit) Rules, 2014, has exempted the mandatory cost audit requirements in respect of units located in Special Economic Zones (SEZ) and for 100% Export Oriented Units (EOU). In view of this, there was no requirement to furnish cost audit of cost records of the Company for its units at Hassan (SEZ) and Doddaballapur (EOU). The Company has exited from the export oriented unit and also exited from the special economic zone. Since the Company''s export revenue, in foreign exchange, for the financial year 2015-2016 was greater than 75% (seventy five percent) of the total revenue of the Company, the Company falls within the exemption specified in Clause 4(3) of The Companies (Cost Records and Audit) Rules, 2014. In view of this, there is no requirement to furnish cost audit of cost records of the Company for its units at Hassan and Doddaballapur.

26. Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is committed to provide a healthy environment to all its employees. Hence, it does not tolerate any discrimination and/or harassment in any form. The Company has in place a Anti Sexual Harrassment Policy and Committee as per the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has not received any complaint during the year.

27. Dividend Distribution Policy

The Board of Directors of the Company have adopted a dividend distribution policy as required under Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2016. The policy is attached as Annexure-10

Acknowledgement

Your Directors wish to place on record their appreciation of the continuous efforts made by all employees in ensuring excellent all- round operational performance. We also wish to thank our Customers, Vendors, Shareholders and Bankers for their continued support. Your Directors would like to express their grateful appreciation to the Central Government and Government of Karnataka for their continued co-operation and assistance.



For and on behalf of the Board

Place: Bengaluru D.K. Himatsingka

Date : August 10, 2016 Executive Chairman


Mar 31, 2015

Dear Members,

The Directors are pleased to present the Thirtieth Annual Report on the operations and performance of your Company, together with audited financial statements and auditors' report for the year ended March 31, 2015.

1. Business Operations Overview

The financial highlights for the year under review are given below:

(Rs. in Lakhs)

Particulars Standalone

2014-15 2013-14 Change %

Revenue 94,841 98,369 -3.6%

Other Income 3,728 1,252 197.8%

Material cost 54,530 60,083 -9.2%

% to Revenue 57.5% 61.1%

EBITDA 18,981 15,154 25.3%

EBIT 15,439 10,508 46.9%

Profit before 10,934 5,832 87.5% exceptional items

Exceptional items - 47

Profit before tax 10,934 5,879 86.0%

Profit after tax 10,934 5,884 85.8%

Particulars Consolidated

2014-15 2013-14 Change %

Revenue 194,057 202,815 -4.3%

Other Income 2,088 473 341.4%

Material cost 125,121 131,920 -5.2%

% to Revenue 64.5% 65.0%

EBITDA 22,153 20,477 8.2%

EBIT 17,689 15,039 17.6%

Profit before 9,145 6,756 35.4% exceptional items

Exceptional items - (414)

Profit before tax 9,145 6,342 44.2%

Profit after tax 9,544 6,335 50.7%

In the Fiscal year 2014 - 15 the group revenue marginally declined by 4.3% to Rs.194,057 lakhs and EBITDA grew by 8.2% to Rs.22,153 lakhs. The increase in EBITDA was driven mainly by optimization of costs and increase in operational efficiency across the group through various initiatives.

Prices of critical raw-material inputs like cotton and silk have softened when compared to previous year and are currently stable.

Prospects

Growth and efficiency initiatives during the year

During the year 2014-15 the company made significant progress on various initiatives relating to its Manufacturing and Distribution business. Some of the initiatives that helped bring additional clarity and operating efficiencies in the business model include

* 'Vector Flow', software based on the principle of Theory of Constraints, was implemented in the Bed Linen unit which helped improve overall raw material usage efficiencies, increase capacity utilization and enhance On-Time-In-Full Order deliveries.

* Warehouse consolidation and Corporate Office consolidation in the North Americas. This is expected to bring in efficiencies in operating costs from the next year.

* Enhancing our branded portfolio through innovative licensing models in the North Americas.

* In the process of implementing the SAP ERP system in the US - which will help drive visibility and overall efficiency.

* Focus on Private Label manufacturing in European markets to enhance overall business offering.

* Focus Brand Bellora at large Box retail formats in the US markets.

* Acquired the remaining 30% stake in its European subsidiary G.B.Spa from its minority partner and quickly realigned market focus.

* Implementation of a comprehensive Risk Management Structure for the Enterprise

* Implementation of an Internal Financial Control (IFC) system to help address overall control requirements and build scalability

* The long term credit rating (CRISIL rating) of the company was upgraded from BBB ve to A -ve and helped drive efficiencies in funding

Subsidiary Companies

As on March 31, 2015, the Company had the following subsidiaries:

Himatsingka Wovens Private Limited, Himatsingka America Inc., Divatex Home Fashions Inc., DWI Holdings Inc., Giuseppe Bellora S.p.A. Himatsingka Singapore Pte. Limited and Twill & Oxford LLC.

There has been no material change in the nature of business of these subsidiaries.

As required under section 129(3), the Company has prepared consolidated financial statements which form a part of the Annual Report.

The consolidated financial statements presented by the Company include the financial results of its subsidiary companies. Further, a statement containing the salient features of the financial statements of its subsidiaries in form AOC-1 is annexed to this report as Annexure 1

Pursuant to section 136 of the Companies Act, 2013, the audited financial statements of the subsidiaries are available on the Company's website at http://www.himatsingka.com/financial-information.html. The Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are kept for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Company will make available the annual accounts of the subsidiary companies and the related information to any member of the Company who may be interested in obtaining it.

As required under the Clause 49 of the Listing Agreement, the Company has drafted a policy for determining material subsidiaries. The policy has been disclosed in the Company's website and can be found at http://www.himatsingka.com/ corporate-governance.html.

Research and development

Research and development continues to provide valuable support to our exports and has helped us to keep pace with a dynamically changing market. We continue to give in-house research and innovation the highest priority.

Environment, safety, energy conservation and technology absorption

Safety and environmental protection remain a key area of focus for the Company. Investments are continuously made in projects that reduce / treat waste and increase energy efficiencies.

We regularly upgrade our effluent treatment and water recycling plants to keep abreast with technological advancements. By avoiding carcinogenic azo class dyes, we ensure eco-friendly production and worker safety. Our endeavor has been to maximize the efficient use of energy and ensure the safe and responsible discharge of residual wastes, while minimizing any adverse environmental impact and waste generation.

2. Dividend:

Your directors have recommended a dividend of 40% (Rs.2.00 per equity share), subject to approval by the shareholders at the Annual General Meeting.

3. Transfer to reserves:

The Company proposes to transfer an amount of Rs.400 lakhs to the Debenture Redemption Reserve.

4. Extract of Annual Return:

In accordance with the Section 92(3) and as required under the section 134(3)(a), the extract of the Annual Return of the Company for the year ended 31st March, 2015 is annexed here to as Annexure 2 in the prescribed form MGT-9.

5. Number of meetings of the Board:

The details of the meetings of the Board and the details of the attendance of the directors in the meetings are provided in the Corporate Governance Report.

6. Directors' Responsibility Statement

As required by the provisions of Section 134(3)(c) of the Companies Act, 2013, the Directors' Responsibility Statement is attached as Annexure 3, forming part of this report.

7. Declaration by Independent Directors

The Company has received from each of its Independent Directors, the declaration as stipulated under Section 149(7) of the Companies Act, 2013, confirming that the director meets the criteria of independence as laid down under section 149(6) of the Companies Act, 2013.

8. Nomination and Remuneration Policy

The Company has formed a Nomination and Remuneration Committee as required under the Section 178 of the Companies Act, 2013. The Committee has formulated a policy as required under Section 178(3) of Companies Act, 2013 stipulating the criteria for determining qualifications, positive attributes and independence of a director and also the criteria relating to the remuneration for the directors, key managerial personnel and other employees. The aforesaid policy is annexed to the Board's report as Annexure 4.

9. Auditors and Auditors' Reports Statutory Audit

The Company at its 29th Annual General Meeting held on 23rd September, 2014 appointed M/s Deloitte Haskins and Sells, Chartered Accountants to hold office till the conclusion of 32nd Annual General Meeting, subject to ratification by the members at every AGM. The report of Statutory Auditors (appearing elsewhere in the Annual Report) does not have any qualifications/ adverse remarks.

Secretarial Audit

The Company had appointed Mr. Vivek Bhat, Company Secretary in Practice, Bengaluru, to conduct the secretarial audit as required under Section 204 of the Companies Act, 2013. The secretarial audit report given by Mr. Vivek Bhat is appended as Annexure 5 to the Board's Report.

In the abovementioned report, Mr. Vivek Bhat has made the following comment:

"The company could not spend the eligible profit on Corporate Social Responsibility measures. However the Company has constituted the CSR Committee and its constitution was as per the regulation."

Board's Response

During the year, the Company has constituted a Corporate Social Responsibility (CSR) committee and has also devised the CSR policy as required under Section 135 of the Companies Act, 2013 and the relevant rules made thereunder. As per the provisions, the total amount to be spent by the Company on CSR activities for the FY 2014-15 was Rs.89.83 lakhs.

During the year, an amount of Rs.1 lakh was spent by the Company. The remaining amount has not been spent as the company was involved with engaging a credible agency and building a framework of CSR.

The Company has subsequently through its CSR committee, shortlisted certain projects for CSR and will expend the appropriate amounts to facilitate the activity.

10. Particulars of loans, guarantees, investments and securities made

The particulars of loans made, guarantees given, investments made and securities provided as per the provisions of Section 186 of the Companies Act, 2013 and the relevant rules made thereunder are given in the notes to the standalone financial statements.

11. Particulars of contracts or arrangements with related parties

All transactions entered into by the Company with its related parties are at arm's length and in the ordinary course of business. However, the list of material related party transactions as per the Company's policy on related party transactions, as required under rule 8(2) of Companies (Account) Rules, 2014, is annexed to the Board's Report as Annexure 6.

The Company has also formulated a policy on dealing with Related Parties Transactions as required under Clause 49 of the Listing Agreement. The same is available in the Company's website at http://www.himatsingka.com/corporate-governance. html.

12. Material changes

No material changes or commitments affecting the financial position of the Company have occurred after the closure of the financial year till the date of this report.

13. Conservation of energy, Technology absorption & Foreign exchange

The details of conservation of energy, technology absorption and foreign exchange are annexed to the Board's Report as Annexure 7.

14. Risk Management

The Company has developed and implemented a comprehensive risk management policy and framework to counter and mitigate the various risks encountered by the Company. The details of the same are given in the Risk Management section elsewhere in this Annual Report.

15. Corporate Social Responsibility

During the year, the Company has constituted a Corporate Social Responsibility (CSR) committee. The committee consists of the following directors:

* Dr. K R S Murthy

* Mr. A K Himatsingka

* Mr. D K Himatsingka

* Mr. Shrikant Himatsingka

The Committee has devised the CSR policy as required under Section 135 of the Companies Act, 2013 and the relevant rules made thereunder. As per the provisions, the total amount to be spent by the Company on CSR activities for the FY 2014-15 was Rs.89.83 lakhs.

During the year, an amount of Rs.1 lakh was spent by the Company. The details of the CSR policy and the CSR spending have been elaborated in the Annexure 8 to this report.

16. Board Performance Evaluation

The Company has, during the year, conducted an evaluation of the Board as a whole, its committees and the individual directors including the independent directors as stipulated in the Nomination and Remuneration policy adopted by the Company. The evaluation was carried out through different evaluation forms which covered among others the evaluation of the composition of the Board/ committee, its effectiveness, activities, governance, and with respect to the chairman and the individual directors, their participation, integrity, independence, knowledge, impact and influence on the Board.

The independent directors of the Company also convened a separate meeting and evaluated the performance of the Board, the non-independent directors and the chairman.

17. Directors

The Board of Directors at its meeting held on February 11, 2015 appointed Mr. Dilip J Thakkar, Dr. K R S Murthy, Mr. Berjis Desai, Mr. Rajiv Khaitan as additional directors (independent) and Ms. Jayashree Poddar as an additional director (Executive, with effect from March 1, 2015). Pursuant to provisions under section 160 and 161 of the Companies Act, 2013 the same has to be ratified by the shareholders in the ensuing Annual General Meeting, and it is proposed to appoint the Independent Directors for a period of 5 years.

In accordance with the provisions of the Companies Act, 2013, and Articles of Association of the Company, Mr. A K Himatsingka retires by rotation and being eligible, offers himself for re-appointment. His re-appointment will be placed as one of the agenda in the ensuing Annual General Meeting.

18. Composition of Audit Committee

The Company has constituted an Audit Committee as required under the Companies Act, 2013. The committee consists of the following directors:

* Mr. Dilip J Thakkar

* Dr. K R S Murthy

* Mr. Rajiv Khaitan

During the year, there have been no incidents where the Board has deviated from the recommendations made by the committee.

19. Vigil Mechanism

As a conscious and vigilant organization, Himatsingka Seide Limited believes in the conduct of the affairs of its constituents in a fair and transparent manner, by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour. In its endeavour to provide its employee a secure and a fearless working environment, the Company has established a "Whistle Blower Policy" as required under the Companies Act, 2013 and the same is also available in the Company's website.

Mr. Ashok Sharma, Company Secretary, has been designated as the Chief Compliance Officer under the policy and the employees can report any instance of unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics policy to him.

In exceptional cases, where the Whistle Blower is not satisfied with the outcome of the investigation and the decision, she/ he can make a direct appeal to the Chairman of the Audit Committee and the contact details of the Chairman is also given in the Policy.

During the year, no complaints were received under this mechanism.

20. Remuneration of Directors and Key Managerial Personnel

a) Details of Directors' remuneration

Rs. In lakhs

Sitting Salaries Director fees and Commission Total perquisites



Dilip J Thakkar 0007339) 1.10 Nil 10.00 11.10

A K Himatsingka 0.50 Nil 10.00 10.50 (DIN: 00183698)*

Rajiv Khaitan (paid to Khaitan & Co., LLP) (Din: 00071487) 1.20 Nil 5.00 6.20

Dr. K R S Murthy 1.40 Nil 5.00 6.40 (DIN: 00167877)

Berjis M Desai (DIN: 00153675) 0.10 Nil 5.00 5,.10

D K Himatsingka Nil 98.90 168.75 267.65 (DIN: 00139516)

Aditya Himatsingka Nil 53.53 68.33 121.86 (DIN: 00138970)

Shrikant Himatsingka (DIN:00122103) N 66.70 168.75 235.45

Jayshree Poddar# Nil 2.88 2.75 5.63

Director Ratio PercentageSitting Median increase over remuneration previous year of employees

Dilip J Thakkar 1190 : 1 3875% 0007339)

A K Himatsingka 11.25 : 1 -80.92% (DIN: 00183698)*

Rajiv Khaitan 664 : 1 5897% (paid to Khaitan & Co., LLP) (Din: 00071487)

Dr. K R S Murthy 6.86 : 1 56.10% (DIN: 00167877)

Berjis M Desai (DIN: 00153675) 5.47: 1 6452%

D K Himatsingka 286.83 : 1 123.83% (DIN: 00139516)

Aditya Himatsingka 130.60 : 1 31.85% (DIN: 00138970)

Shrikant 252.33 : 1 80.39% Himatsingka (DIN:00122103) N

Jayshree Poddar# 6.03 : 1 NA

* Mr. A K Himatsingka who was an Executive Director during the previous year, was re-appointed as a Non-Executive Director with effect from April 1, 2014.

# Ms. Jayshree Poddar was appointed as a director with effect from March 1, 2015.

In the remuneration mentioned above, the sitting fees, salaries and perquisites form the fixed component of the total remuneration and the commission is a variable component linked to the performance of the Company.

b) Details of the remuneration of the Key Managerial Personnel (other than executive directors mentioned above)

Name of the Key Total Remuneration Percentage Managerial Designation (Rs. In Lakhs) increase Personnel over previous year

K P Pradeep President - Finance and Group CFO 117.43 21.59%

Ashok Kumar Associate Vice Sharma President - Treasury, 39.17 18.80% Taxation cum Company Secretary

c) The percentage increase in median remuneration of the employees is 16.32%

d) The number of permanent employees in the rolls of the Company is 2,885

e) The average increase in the remuneration of the employees was 15.50% during the year while the Company's profit before tax grew by 85.84% from Rs.5,879.37 lakhs to Rs.10,934.04 lakhs. The revenues for the same period saw a marginal dip of 3.59% to Rs.94,840.76 lakhs from Rs.98,368.70 lakhs of the previous year. The remuneration of the Key Managerial personnel (KMP) during the year grew by 65.50%. The increase in the remuneration is in correlation to the performance of the Company. The comparison of the remuneration of each KMP against the performance of the Company is given below:

Total Percentage Name of the KMP Designation Remuneration increase over (Rs. In previous Lakhs) year

D K Himatsingka Managing Director 267.65 123.82%

Aditya Himatsingka Executive Director 121.86 31.86%

Shrikant Himatsingka Executive Director 235.45 80.40%

Jayshree Poddar * Executive Director 5.63 NA

K P Pradeep President - Finance 117.43 21.59% and Group CFO

Associate Vice Ashok Kumar Sharma Presldent - 39.17 18.80% Taxation cum Company Secretary

Name of the KMP Designation Profit Before Percentage Tax Increase (Rs. in lakhs) over previous year

D K Himatsingka Managing Director

Aditya Himatsingka Executive Director

Shrikant Himatsingka Executive Director

Jayshree Poddar * Executive Director

K P Pradeep President - Finance 10,934.04 85.84% and Group CFO

Associate Vice Ashok Kumar Sharma Presldent - Taxation cum Company Secretary

*Ms. Jayshree Poddar was appointed as an executive director with effect from March 1, 2015.

f) The average increase in the salaries of employees other than managerial personnel during the year was 15.50% and the average increase of the remuneration of managerial personnel was 65.50%. The increase in the remuneration of managerial personnel is in correlation to their individual performance and to the performance of the Company.

g) The key parameters for the variable component of remuneration availed by the directors are the amount of responsibilities taken, performance of the business, specific contribution made by the director to the overall performance of the Company.

h) During the year, there were no employees whose remuneration was higher than that of the highest paid director.

k) Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year:

Particulars March 31, 2015 March 31, 2014 Percentage Increase/ (decrease)

Market Capitalisation 792.58 566.62 39.88% (Rs. Crores)

Closing price (Rs.) 80.50 57.55 39.88%

No. of Shares 98,457,160 98,457,160 -

Earnings Per Share 11.11 5.98 85.79%

Price Earnings Ratio 7.25 9.62 (24.64)%

21. Corporate Governance

We comply with the corporate governance code as prescribed by the stock exchanges and SEBI. You will find a detailed report on corporate governance as part of this annual report. The auditor's certificate on compliance with the mandatory recommendations on corporate governance is annexed to this report.

22. Insurance

The Company's assets are prone to risks / peril. The major risks / peril are adequately insured.

23. Public Deposits

The Company has not accepted any deposits from the public during the year within the meaning of the Companies Act, 2013.

24. Cost Auditors

The Companies (Cost Records and Audit) Rules, 2014, has exempted the mandatory cost audit requirements in respect of units located in Special Economic Zones (SEZ) and for 100% Export Oriented Units (EOU). In view of this, there is no requirement to furnish cost audit of cost records of the Company for its units at Hassan (SEZ) and Doddaballapur (EOU).

Acknowledgement

Your Directors wish to place on record their appreciation of the continuous efforts made by all employees in ensuring excellent all-round operational performance. We also wish to thank our Customers, Vendors, Shareholders and Bankers for their continued support. Your Directors would like to express their grateful appreciation to the Central Government and Government of Karnataka for their continued co-operation and assistance.

For and on behalf of the Board

Place: Bengaluru Dilip J Thakkar Date: July 23, 2015 Chairman


Mar 31, 2014

Dear Members,

The Directors are pleased to present the Twenty – Ninth Annual Report on the operations and performance of your Company, together with audited financial statements and auditors'' report for the year ended March 31, 2014.

The financial highlights for the year under review are given below:

Rs. in Lakhs

Particulars Standalone Consolidated

2013-14 2012-13 Change % 2013-14 2012-13 Change %

Revenue 99,621 72,755 36.9% 203,288 169,841 19.7%

Material cost 60,083 40,818 47.2% 131,920 110,073 19.8%

% to Revenue 60.3% 56.1% 64.9% 64.8%

EBITDA 15,154 12,098 25.2% 20,477 16,683 22.7%

EBIT 10,508 7,482 40.4% 15,039 11,468 31.2%

Profit before exceptional items 5,832 3,878 50.4% 6,756 4,939 36.8%

Exceptional items 47 356 (414) 235

Profit before tax 5,879 4,234 38.8% 6,342 5,175 22.6%

Profit after tax 5,884 4,234 38.9% 6,335 5,732 10.5%

Dividend

Your directors have recommended a dividend of 30% (Rs.1.50 per equity share), subject to approval by the shareholders at the ensuing Annual General Meeting.

Transfer to reserves

The Company proposes to transfer Rs.588.50 lakhs to the General Reserve and an amount of Rs.400 lakhs to the Debenture Redemption Reserve.

Business Operations Overview

In the Fiscal year 2013 – 14, the company delivered a good performance with the Group revenue increasing by 19.7% to Rs.203,288 lakhs and EBITDA growing by 22.7% to Rs.20,477 lakhs. The increase in EBITDA was driven mainly by growth in sales, stable raw-material pricing and continued optimization of costs across the group.

Commodity prices globally appeared to be stabilizing as against the previous year. Our critical raw-material is derived from cotton and silk. Both cotton and silk prices which surged to historic highs in the year 2010-11 declined signifi cantly to a more reasonable level during the year.

Exceptional gain of Rs.47 Lakhs in standalone results includes an income of Rs.12.36 crores on account of a Subsidy under the Industrial Policy of the Government of Karnataka. It also includes an expense of Rs.11.89 crores towards a write off of investment made during the year in Giuseppe Bellora SpA, the European Retail and Distribution subsidiary.

Exceptional loss of Rs.4.14 Crores in Consolidated Results includes an income of Rs.12.36 crores on account of a Subsidy under the Industrial Policy of the Government of Karnataka and one-time expenses on account of

- Manpower rationalisation, costs of closure of some retail shops and MBOs in Italian subsidiary – Rs.11.52 crores

- Warehouse consolidation in the North America and resulting manpower rationalisation – Rs.4.97 crores

Prospects

Growth and effi ciency initiatives during the year

During the year 2013-14, the Group made signifi cant progress and is expecting to experience benefits from many of the initiatives. Some of the initiatives are detailed below

- ''VectorFlow'', software based on the principle of Theory of Constraints, was implemented in the Bed Linen unit aiming to reduce material wastages, increase capacity and enhance On-Time-In-Full Order deliveries.

- Warehousing Consolidation activity was taken up in North America. This is expected to bring in effi ciencies in operating costs from the next year.

- Focus on Private Label manufacturing in European markets to reduce reliance on Italian retail sales.

- Bellora stores were opened in Russia.

Annual accounts of the subsidiary companies and Consolidated financial statements

As on March 31, 2014, the Company had the following subsidiaries:

Himatsingka Wovens Private Limited, Himatsingka America Inc., Divatex Home Fashion Inc., DWI Holdings Inc., Giuseppe Bellora S.p.A. Himatsingka Singapore Pte. Limited and Twill & Oxford LLC.

There has been no material change in the nature of business of these subsidiaries.

The Ministry of Corporate Affairs, Government of India has issued a Circular No. 2/2011 dated February 8, 2011 granting general exemption to companies under Section 212(8) from attaching the documents referred to in Section 212(1) pertaining to its subsidiaries, subject to approval by the Board of Directors of the Company and furnishing of certain financial information in the Annual Report.

The Board of Directors of the Company has accordingly decided to dispense with the requirement of attaching to its Annual Report the annual audited accounts of the subsidiaries. Accordingly, the Annual Report of the Company does not contain the individual financial statements of these subsidiaries, but contains audited Consolidated financial statements of the Company and its subsidiaries.

The Consolidated financial statements presented by the Company include the financial results of its subsidiary companies. Further, a statement containing the particulars prescribed under the terms of the said exemption for each of the Company''s subsidiaries is also forming part of the Consolidated financial statements.

The Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are kept for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Company will make available the annual accounts of the subsidiary companies and the related information to any member of the Company who may be interested in obtaining it.

Research and development

Research and development continues to provide valuable support to our exports and has helped us to keep pace with a dynamically changing market. We continue to give in-house research and innovation the highest priority.

Environment, safety, energy conservation and technology absorption

Safety and environmental protection remain a key area of focus for the Company. Investments are continuously made in projects that reduce/treat waste and increase energy efficiencies.

We regularly upgrade our effluent treatment and water recycling plants to keep abreast with technological advancements. By avoiding carcinogenic azo class dyes, we ensure eco-friendly production and worker safety. Our endeavor has been to maximize the efficient use of energy and ensure the safe and responsible discharge of residual wastes, while minimizing any adverse environmental impact and waste generation.

Information under section 217(1)(e) read with Companies (Disclosure of particulars in the report of Directors) Rules, 1988 are given in the Annexure, forming part of this report.

Corporate Governance

We comply with the corporate governance code as prescribed by the stock exchanges under the listing agreement. You will find a detailed report on corporate governance as part of this annual report. The auditors'' certificate on compliance with the mandatory recommendations on corporate governance is annexed to this report.

Insurance

The Company''s assets are prone to risks/ peril. The major risks/ peril are adequately insured.

Directors'' Responsibility Statement

As required by the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors'' Responsibility Statement is attached as Annexure, forming part of this report.

Directors

In accordance with the provisions of the Companies Act, 2013, and Articles of Association of the Company, Mr. Shrikant Himatsingka ret ires by rotation and being eligible, offers himself for re-appointment. His re-appointment will be placed as one of the agenda in the ensuing Annual General Meeting.

Particulars of employees

In terms of provisions of section 217 (2A) of the Companies Act, 1956 and rules made thereunder the names and other particulars of employees are set out in the Annexure to the Directors'' Report. However as per the provisions of Sections 219 (1)(b)(iv) of the Companies Act 1956, the Annual Report excluding the aforesaid information is being sent out to all members of the Company and other entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Offi ce of the Company.

Public Deposits

The Company has not accepted any deposits from the public during the year within the meaning of Section 58A of the Companies Act, 1956.

Auditors

Deloitte Haskins & Sells (Firm Registration No. 008072S) Chartered Accountants, the Company''s Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Board at its meeting held on August 7, 2014 has proposed appointment of Auditors for a period of 3 years, i.e., from the date of the ensuing Annual General Meeting till the conclusion of Annual General Meeting for the year 2016-17.Members are requested to appoint the auditors and fi x their remuneration for the period of appointment.

Cost Auditors

The Ministry of Corporate Affairs vide its General Circular No. 11/2012 dated May 25, 2012, has exempted the mandatory cost audit under the provisions of Section 233B of the Companies Act, 1956, in respect of units located in Special Economic Zones (SEZ) and for 100% Export Oriented Units (EOU). In view of this, there is no requirement to furnish cost audit of cost records of the Company for its units at Hassan (SEZ) and Doddaballapur (EOU).

Acknowledgement

Your Directors wish to place on record their appreciation of the unstinting efforts made by all employees in ensuring excellent all-round operational performance. We also wish to thank our Customers, Vendors, Shareholders and Bankers for their continued support. Your Directors would like to express their grateful appreciation to the Central Government and Government of Karnataka for their continued co-operation and assistance.

For and on behalf of the Board

Place: Bangalore Dilip J Thakkar

Date : August 7, 2014 Chairman


Mar 31, 2013

The Directors are pleased to present the Twenty – Eighth Annual Report on the operations and performance of your Company, together with audited fnancial statements and auditors'' report for the year ended March 31, 2013.

The fnancial highlights for the year under review are given below:

Rs. in lakhs

Standalone Particulars 2012-13 2011-12 Change %

Revenue 72,755 65,652 10.8

Material cost 40,804 38,752 5.3

As a % of Revenue 56.1% 59.0% -5.0

EBITDA 12,098 10,249 18.0

Proft before exceptional items 3,878 2,405 61.2

Exceptional items 356 (403) 188.3

Proft / (loss) before tax 4,234 2,002 111.5

Proft / (loss) after tax 4,234 2,002 111.5

Particulars Consolidated

2012-13 2011-12 Change %

Revenue 169,841 143,162 18.6

Material cost 110,059 90,755 21.3

As a % of Revenue 64.8% 63.4% 2.2

EBITDA 16,684 14,762 13.0

Proft before exceptional items 4,939 3,921 25.9

Exceptional items 235 555 -57.7

Proft / (loss) before tax 5,175 4,476 15.6

Proft / (loss) after tax 5,295 3,394 56.0

Note: Figures are net of pre-operative expenses capitalised.

Dividend

Your directors have recommended a dividend of 20% (Re. 1 per equity share), subject to approval by the shareholders at the Annual General Meeting

Transfer to reserves

The Company proposes to transfer Rs. 317.39 lakhs to the General Reserve and an amount of Rs. 400 lakhs to the Debenture Redemption Reserve.

Business Operations Overview and Outlook

The year 2012-13 was a period of relative stability for the Group. The Group generates a signifcant part of its revenues from the US and Europe and hence the results are affected by the state of the economy in these region. The US markets were relatively stable during the past year while the European environment was under continued stress and exhibited de-growth during the past year. The year also saw the Indian economy showing signs of a slowdown in its growth.

In these economic conditions, the consolidated revenues increased by 18.6% to Rs. 169,841 lakhs.

Prices of critical raw material inputs like Cotton and silk started frming up towards the second half of 2012.

Exceptional items gain of Rs. 356 lakhs in standalone results represent the impact of the transactions arising against a derivative contract designated as fair value through proft and loss.

Exceptional items in consolidated results include gain on exceptional item in standalone results compensated by loss on severance pay of Rs. 121 lakhs.

The Consolidated Proft After Tax for the year increased by 73.4% to Rs. 5,732 lakhs.

Prospects

Consumer spending in the US is expected to be stable during the current year. The housing sector in the US is showing signs of a rebound.

The large retailers prefer vertically integrated players like your Company, due to better product development capabilities and control over supply chain which consequently ensures higher service levels. The Group has developed strong in-house expertise to manage product development, sourcing, manufacturing and distribution of home textiles.

The Group is focused on maintaining growth and optimizing its Return on Assets through leveraging distribution capabilities, enhanced utilization of manufacturing capacities and cost optimization measures.

Growth initiatives during the year

The Group continues to explore various ways of reaching out to new customers, enhancing focus on its brands and launching value added products leading to the growth in sales.

The retail business ‘‘atmosphere" launched its frst online store ‘‘atmospheredirect.com". This e-commerce initiative is part of its overall focus to expand its customer base and provide an enhanced shopping experience.

As part of an overall initiative to enhance the operational and fnancial cohesiveness in the businesses the Company has implemented an ERP package for all locations of its manufacturing and retail divisions in India.

At the beginning of the year, the Company held through its subsidiary Himatsingka America Inc., USA (HimA) , 80% shareholding in Divatex. During the year the Company acquired the remaining 20% stake from the minority shareholder and currently has 100% shareholding.

Annual accounts of the subsidiaries

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Proft and Loss and other documents of the subsidiary companies are kept for inspection at the Registered Offce of the Company and that of the respective subsidiary companies. The Company will make available the annual accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Consolidated fnancial statements presented by the Company include the fnancial results of its subsidiary companies. Further, a statement containing the particulars prescribed under the terms of the said exemption for each of the Company''s subsidiaries is also forming part of the Consolidated fnancial statements.

Subsidiary Companies and consolidated fnancial statements

As on 31st March 2013, the Company had the following subsidiaries:

Himatsingka Wovens Private Limited, Himatsingka America, Inc., Divatex Home Fashion Inc. DWI Holdings Inc., Giuseppe Bellora S.p.A., Himatsingka Singapore Pte Ltd and Twill & Oxford LLC.

There has been no material change in the nature of the business of these subsidiaries.

In 2012-13, the Company through its 100% subsidiary Himatsingka America Inc. acquired the remaining 20% minority stake in Divatex Home Fashion Inc.

The annual accounts of these subsidiary companies have been consolidated with the accounts of Himatsingka Seide Limited.

The Ministry of Corporate Affairs, Government of India has issued a Circular No. 2 /2011 dated 8th February 2011 granting general exemption to Companies under Sec 212(8) from attaching the documents referred to in Sec 212 (1) pertaining to its subsidiaries, subject to approval by the Board of Directors of the Company and furnishing of certain fnancial information in the Annual Report.

The Board of Directors of the Company has accordingly decided to dispense with the requirement of attaching to its Annual Report the annual audited accounts of the Company''s subsidiaries.

Accordingly, the Annual Report of the Company does not contain the individual fnancial statements of these subsidiaries, but contains the audited consolidated fnancial statements of the Company and its subsidiaries. The Annual Accounts of these subsidiary companies, along with the related information, is available for inspection at the Company''s registered offce and copies shall be provided on request. The statement pursuant to the approval under section 212(8) of the Companies Act, 1956, is annexed together with the Annual Accounts of the Company.

Research and development

Research and development continues to provide valuable support to our exports and has helped us to keep pace with a dynamically changing market. We continue to give in-house research and innovation the highest priority.

Environment, safety, energy conservation and technology absorption

Safety and environmental protection remain a key area of focus for the Company. Investments are continuously made in projects that reduce / treat waste and increase energy effciencies.

We regularly upgrade our effuent treatment and water recycling plants to keep abreast with technological advancements. By avoiding carcinogenic azo class dyes, we ensure eco-friendly production and worker safety. Our endeavor has been to maximize the effcient use of energy and ensure the safe and responsible discharge of residual wastes, while minimizing any adverse environmental impact and waste generation.

Information under section 217(1)(e) read with Companies (Disclosure of particulars in the report of Directors) Rules, 1988 are given in the Annexure, forming part of this report.

Foreign exchange earnings and outgoings

Rs. in lakhs

earnings

Export (FOB Value) 65,438

Interest 484

outgo

Import of raw material and other inputs 26,239

Other expenses 492 26,731

Net foreign exchange earnings from operations 39,192

Import of capital goods 25

Corporate Governance

We comply with the corporate governance code as prescribed by the stock exchanges and SEBI. You will fnd a detailed report on corporate governance as part of this annual report. The auditor''s certifcate on compliance with the mandatory recommendations on corporate governance is annexed to this report.

Insurance

The Company''s assets are prone to risks / peril. The major risks / peril are adequately insured.

Directors'' Responsibility Statement

As required by the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors'' Responsibility Statement is attached as Annexure, forming part of this report.

Directors

In accordance with the provisions of the Companies Act, 1956, and Articles of Association of the Company, Mr. A.K. Dasgupta and Mr. Dilip J. Thakkar retire by rotation. Mr. A.K. Dasgupta is not offering himself for reappointment and has expressed his desire to step down from the Board. The Board would like to place on record their appreciation for the contributions made by Mr. A.K. Dasgupta towards the growth of the Company. Mr. Dilip J. Thakkar being eligible, offers himself for re-appointment. His re-appointment will be placed as one of the items in the agenda in the ensuing Annual General Meeting.

Particulars of employees

In terms of provisions of section 217 (2A) of the Companies Act, 1956 and the rules made thereunder the names and other particulars of employees are set out in the Annexure to Directors'' Report. However as per the provisions of Sections 219 (1) (b) (iv) of the Companies Act 1956, the Annual report excluding the aforesaid information is being sent to all members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered offce of the Company.

Public Deposits

The Company has not accepted any deposits from the public during the year within the meaning of Section 58A of the Companies Act, 1956.

Auditors

Deloitte Haskins & Sells (Firm Registration No. 008072S) Chartered Accountants, the Company''s Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. Members are requested to appoint the auditors and fx their remuneration for the current year.

Cost Auditors

The Ministry of Corporate Affairs vide its General Circular No.11 / 2012 dated May 25, 2012, has exempted the mandatory cost audit under the provisions of Section 233B of the Companies Act, 1956, in respect of units located in Special Economic Zone (SEZs) and for 100% Export Oriented Units (EOUs). In view of this the audit of Cost Records of the Company for its two unit at Hassan (SEZ) and Doddaballapur (EOU) is exempted and as a result there will no more be a requirement to furnish a cost audit report for the Company.

Acknowledgement

Your Directors wish to place on record their appreciation of the unstinting efforts made by all employees in ensuring excellent all-round operational performance. We also wish to thank our Customers, Vendors, Shareholders and Bankers for their continued support. Your Directors would like to express their grateful appreciation to the Central Government and Government of Karnataka for their continued co-operation and assistance.

For and on behalf of the Board

Place: Bangalore dilip J. Thakkar

Date: May 25, 2013 Chairman


Mar 31, 2012

The Directors are pleased to present the Twenty - Seventh Annual Report on the operations and performance of your Company, together with audited financial statements and auditors' report for the year ended March 31, 2012.

The financial highlights for the year under review are given below: (Rs. in lakhs)

Standalone Financial results 2011-12 2010-11 Change

Revenue 65,652 52,028 26.2%

Material cost 38,752 33,852 14.5%

% of Revenue 59.0% 65.1%

Profit before depreciation, interest, 10,249 3,368 204.3% exceptional items and tax

Profit / (loss) before exceptional 2,405 (4,218) items

Exceptional items (403) -

Profit / (loss) before tax 2,002 (4,218)

Profit / (loss) after tax 2,002 (4,218)

Financial Results Consolidated

2011-12 2010-11 Change"

Revenue 143,162 124,068 15.4%

Material cost 90,755 79,368 14.3%

% of Revenue 63.4% 64.0%

Profit before depreciation, interest, 14,762 9,510 55.2% exceptional items and tax

Profit / (loss) before exceptional 3,921 (1,398) items

Exceptional items 555 -

Profit / (loss) before tax 4,476 (1,398)

Profit / (loss) after tax 3,394 (1,578)

Dividend

Your Directors have recommended a dividend of 10% (Rs. 0.50 per equity share), subject to approval by the shareholders at the Annual General Meeting.

Business Operations Overview and Outlook

In the year 2011, the US economy made significant gains and provided a semblance of stability to the world economy. The European sovereign debt crisis continued to engage the collective attention of the world. It now appears that the issues in Europe are deeper than previously envisaged and needs to be addressed structurally. The speed of intervention will address the extent of impact on global economies.

The global GDP growth slowed to 3.85% compared to 5.27% in the previous year. The economic growth was mainly driven by domestic consumption in the emerging markets particularly China and India.

The year 2011-12 was marked by a significant volatility in foreign exchange rates. The rupee continues to be under pressure and has touched an all-time low during the year.

Even under these difficult economic conditions, the Company delivered a good performance with the Group revenue increasing by 15.4% to Rs. 143,162 lakhs and EBITDA growing by 55.2% to Rs. 14,762 lakhs. The increase in EBITDA was driven mainly by growth in sales, stable raw-material pricing and continued optimization of costs across the group.

Commodity prices globally appeared to be stabilizing as against the previous year. Our critical raw-material is derived from cotton and silk. Both cotton and silk prices which surged to historic highs in the year 2010-11 declined significantly to a more reasonable level during the year.

Exceptional items in standalone results include a loss of Rs. 160 lakhs due to change in fair value and a loss of Rs. 243 lakhs on monthly settlements of a foreign exchange derivative contract.

Exceptional items in consolidated results include in addition to exceptional item in standalone results, profit of Rs. 1,128 lakhs on sale of surplus land and buildings with certain moveable fixed assets and certain one-time costs of Rs. 170 lakhs.

During the year, the Group consolidated its manufacturing operations. As part of this exercise, it divested surplus assets of its subsidiary Himatsingka Wovens Private Limited for an amount of Rs. 3,387 lakhs.

Prospects

The data emerging from USA in last quarter of 2011-12 shows lower unemployment levels, an increase in home sales and growth in consumer credit. While in Euro zone an economic crisis appears to be brewing and may have an impact on the global economy. However, opportunities seem to exist in many emerging economies of the world.

The Group recognizes the changing global scenario and is taking appropriate steps to enhance value proposition to our existing customers and at the same time explore opportunities in new geographies.

Growth initiatives during the year

The Group explored various ways of reaching out to new customers, enhancing focus on its brands and launching value added products leading to the growth in sales.

During the year, we added Bed Linen produced by us, as a new product offering in all 'ATMOSPHERE' stores. The response is encouraging.

Annual accounts of the subsidiaries

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are kept for inspection at the Registered Office of the Company and that of the respective subsidiary companies and are also available on the Company's website i.e. www.himatsingka.com. The Company will make available the annual accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Consolidated financial statements presented by the Company include the financial results of its subsidiary companies. Further, a statement containing the particulars prescribed under the terms of the said exemption for each of the Company's subsidiaries is also forming part of the Consolidated financial statements.

Summary of Subsidiary results:

Divatex Home Fashions Inc., USA (Divatex)

Divatex is the third largest distributor of Bed Linen products in the USA and gives the Group deep in roads into the private label market. Divatex also has the license to market important brands such as Esprit and Waverly in the United States.

For the year ended March 31, 2012, Divatex recorded Revenue of USD 172.46 million (Rs. 82,763 lakhs) compared to USD 140.98 million (Rs. 64,239 lakhs) in the previous year and profit before tax of USD 5.55 million (Rs. 2,617 lakhs) compared to USD 6.99 million (Rs. 3,198 lakhs) for the previous year.

DWI Holdings Inc., USA (DWI)

DWI possesses licenses of luxury home textile brands such as Calvin Klein Home, Barbara Barry and Peacock Alley. This gives us access to the high end and branded segment of the bedding market in the USA.

For the year ended March 31, 2012, DWI recorded Revenue of USD 69.18 million (Rs. 33,131 lakhs) compared to USD 58.35 million (Rs. 26,606 lakhs) in the previous year and profit before tax of USD 2.59 million (Rs. 1,218 lakhs) compared to USD 2.43 million (Rs. 1,115 lakhs) for the previous year.

Giuseppe Bellora SpA, Italy (Bellora)

Bellora has a significant share in the luxury market in Italy and gives us a platform to expand our business in the other markets of Europe and other geographies.

For the year ended March 31, 2012, Bellora recorded Revenue of Euro 17.22 million (Rs. 11,345 lakhs) compared to Euro 19.37 million (Rs. 11,688 lakhs) in the previous year and loss before tax of Euro 0.83 million (Rs. 551 lakhs) compared to Euro 1.14 million (Rs. 687 lakhs) for the previous year.

Bellora reported lower sales due to stressed economic conditions in Euro zone, especially Italy. Better sales mix, royalty income and cost rationalization helped us to report lower loss compared to the previous year.

Himatsingka Wovens Private Limited, India (HWPL)

HWPL operates 12 exclusive retail showrooms of 'ATMOSPHERE' in 10 cities in India. 'ATMOSPHERE' is India's first luxury Home Textile brand. With an exclusive collection of over 2500 products, the brand offers the most comprehensive range of luxury Drapery and Upholstery fabrics for its customers. Its products are tailored to comply with both residential and institutional applications.

For the year ended March 31, 2012, HWPL recorded Revenue of Rs. 4,389 lakhs compared to Rs. 4,257 lakhs in the previous year and profit before tax of Rs. 558 lakhs compared to Rs. 210 lakhs for the previous year.

HWPL results include a profit of Rs. 1,128 lakhs on sale of surplus assets and loss on diminution in value of investment in HSPL of Rs. 884 lakhs reported as exceptional items.

Himatsingka America Inc., USA (HimA)

HimA is the holding Company for Divatex and DWI.

For the year ended March 31, 2012, HimA recorded Revenue of USD 0.60 million (Rs. 270 lakhs) compared to USD 3.61 million (Rs. 1,645 lakhs) in the previous year and loss before tax of USD 3.77 million (Rs. 1,453 lakhs) compared to USD 3.27 million (Rs. 1,484 lakhs) for the previous year.

Pursuant to the decision to consolidate sales operations in North America, HimA transferred its operating activities to DWI. As a result, financial performance of HimA is not comparable with previous year.

Twill & Oxford LLC, Dubai (T&O)

T&O operates the Group's exclusive retail showroom of 'ATMOSPHERE' in Dubai.

For the year ended March 31, 2012, T&O recorded Revenue of AED 7.65 million (Rs. 991 lakhs) compared to AED 5.92 million (Rs. 733 lakhs) in the previous year and profit before tax of AED 0.70 million (Rs. 64 lakhs) compared to AED 0.43 million (Rs. 54 lakhs) for the previous year.

Himatsingka Singapore Pte Limited, Singapore (HSPL)

HSPL operates the Group's exclusive retail showroom of 'ATMOSPHERE' in Singapore.

For the year ended March 31, 2012, HSPL recorded Revenue of SGD 0.94 million (Rs. 358 lakhs) compared to SGD 0.86 million (Rs. 294 lakhs) in the previous year and loss before tax of SGD 0.31 million (Rs. 130 lakhs) compared to SGD 0.46 million (Rs. 221 lakhs) for the previous year.

Research and development

Research and development continues to provide valuable support to our exports and has helped us to keep pace with a dynamically changing market. We continue to give in-house research and innovation the highest priority.

Environment, safety, energy conservation and technology absorption

Safety and environmental protection remain a key area of focus for the Company. Investments are continuously made in projects that reduce / treat waste and increase energy efficiencies.

We regularly upgrade our effluent treatment and water recycling plants to keep abreast with technological advancements. By avoiding carcinogenic azo class dyes, we ensure eco-friendly production and worker safety. Our endeavor has been to maximize the efficient use of energy and ensure the safe and responsible discharge of residual wastes, while minimizing any adverse environmental impact and waste generation.

Information under section 217(1)(e) read with Companies (Disclosure of particulars in the report of Directors) Rules, 1988 are given in the Annexure, forming part of this report.

Corporate Governance

We comply with the corporate governance code as prescribed by the stock exchanges and SEBI. You will find a detailed report on corporate governance as part of this annual report. The auditor's certificate on compliance with the mandatory recommendations on corporate governance is annexed to this report.

Insurance

The Company's assets are prone to risks / peril. The major risks / peril are adequately insured.

Directors' Responsibility Statement

As required by the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors' Responsibility Statement is attached as Annexure, forming part of this report.

Directors

In accordance with the provisions of the Companies Act, 1956, and Articles of Association of the Company, Dr. K.R.S. Murthy and Mr. Rajiv Khaitan retire by rotation and being eligible, offer themselves for re-appointment. Their re-appointments will be placed as one of the agenda in the ensuing Annual General Meeting.

Particulars of employees

In terms of provisions of Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in the Annexure to Directors' Report section. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company.

Public Deposits

The Company has not accepted any deposits from the public during the year within the meaning of Section 58A of the Companies Act, 1956.

Auditors

Deloitte Haskins & Sells (Firm Registration No. 008072S) Chartered Accountants, the Company's Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. Members are requested to appoint the auditors and fix their remuneration for the current year.

Cost Auditors

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956, in respect of the audit of Cost Records of the Company, M/s Rao, Murthy & Associates, Cost Accountants, have been appointed as the Cost Auditor for the financial year 2011-12. The cost audit report for the financial year 2010-11, which was due to be filed with the ministry of Company affairs by September 30, 2011, was filed on August 29, 2011.

Acknowledgement

Your Directors wish to place on record their appreciation of the unstinting efforts made by all employees in ensuring excellent all-round operational performance. We also wish to thank our Customers, Vendors, Shareholders and Bankers for their continued support. Your Directors would like to express their grateful appreciation to the Central Government and Government of Karnataka for their continued co-operation and assistance.

For and on behalf of the Board

Place: Bangalore Dilip J. Thakkar

Date: May 26, 2012 Chairman


Mar 31, 2011

Dear Members,

The Directors are pleased to present the Twenty - Sixth Annual Report on the operations and performance of your Company together with audited financial statements and auditors' report for the year ended 31st March, 2011.

Year in retrospect

The world economy in 2010 ended without the 'double-dip' recession that many economists had predicted. The quantitative easing combined with the tax cut package in the US, provided some stimulus to the US economy. The European Union Sovereign debt concerns resulted in a slow-down in economies in the region. The consumers in overseas markets have cut back on discretionary and big-ticket spending refected in higher savings rates in some geographies.

The year 2010-11 was a year of consolidation for the various businesses of the Company. The distribution businesses in North America reported a growth of 18.00%, while the European, India and Asia distribution business continued to be steady. The Curtain and Upholstery exports business reported a sales growth of 5.52% during the year.

For 2010-11, standalone revenue from operations grew by 9.23% to Rs.50,801.61 lakhs, as compared to Rs. 46,510.68 lakhs in 2009-10. Other income for the year was Rs.1,226.35 lakhs as against Rs.1,082.13 lakhs in the previous year.

The significant area of concern was an unprecedented increase in the cost of raw materials coupled with the weakening dollar. The increase in material cost in the current year over a normative pricing scenario is estimated to be approximately Rs. 9,000 lakhs, while the Indian Rupee strengthened against the dollar by 3.20%.

Your Company had increased realizations of products sold, introduced product mix changes and changes in their pattern of sourcing during the year. However, these changes did not completely mitigate the increase in input costs. Consequently there was a significant contraction in the margin of the manufacturing business. The greatest impact was felt in the Bed Linen division, which reported a loss of Rs.5,913.35 lakhs, as compared to a loss of Rs. 1,787.01 lakhs in the previous year.

For the year under review, the Company reported a loss of Rs.4,218.37 lakhs as against a profit of Rs.820.54 lakhs in the previous year.

(Rs. in lakhs)

2010-11 2009-10

Sales 48,715.49 45,624.77

Other operating income 2,086.12 885.91

Revenue from operations 50,801.61 46,510.68

Other income 1,226.35 1,082.13

Total income 52,027.96 47,592.81

Profit before depreciation, interest, exceptional items and tax 3,351.90 6,985.98

Profit / (loss) before tax (4,218.37) 810.97

Provision for tax - (9.57)

Profit / (loss) after tax (4,218.37) 820.54

Profit brought forward from previous year 6,692.72 6,159.20

Profit available for appropriation 2,474.35 6,979.74

Appropriations

Proposed dividend - 246.14

Tax on distributed profits - 40.88

Profit carried to Balance Sheet 2,474.35 6,692.72

Consolidated Financial Results

The Company's consolidated total income increased by 14.5% to Rs.124,067.51 lakhs as compared to Rs.108,330.39 lakhs in the previous year. As mentioned earlier, on account of steep increase in cost of raw materials, the Bed Linen division reported a loss of Rs.5,913.35 lakhs as compared to a loss of Rs. 1,787.01 lakhs in the previous year. However the loss in the Bed-linen division was partially offset by good performance in the North American markets thereby resulting in a lower consolidated loss as against the standalone performance for the year.

The consolidated loss for the year was Rs.1,657.58 lakhs as compared to profit of Rs.1,179.22 lakhs in the previous year.

Prospects

USA and Europe are the key markets for the Company's products. The North American markets in particular have shown a growth of 16.03%. While the economic data disclosed from these two markets shows cautious optimism, we anticipate a stable situation for the future.

Growth initiatives during the year

The Company has invested significant time and resources in addressing changing requirements in a complex market. Initiatives in the regard include product re-engineering, addressing requirements of price sensitive markets, new product launches, addition of new customers and launching new distribution channels.

The Company is planning to enhance the retail presence of its luxury brand "atmosphere" through opening of additional retail outlets in the Middle East, South East Asia and India. The company also plans to introduce a new brand in home furnishings which will cater to the mid-market segment.

Performance of subsidiary companies Himatsingka Wovens Private Limited (HWPL)

The retail stores "ATMOSPHERE" are managed by HWPL, a wholly owned subsidiary. HWPL reported a marginal decline in sales by 3.65% to Rs.3,837.57 lakhs in the current year on account of the stressful market conditions.During the year, the made-ups facility at Apparel Park - Dodaballapur contributed Rs.484.92 lakhs to total income. For the year EBIDTA was Rs.877.85 lakhs as compared to Rs. 837.00 lakhs in the previous year. Profit before tax was lower at Rs.210.28 lakhs as compared to Rs.253.72 lakhs in the previous year.

Himatsingka America Inc. (HimA)

HimA is a wholly-owned subsidiary which markets products of our Silk division in the USA. HimA is also the holding Company for Divatex Home Fashions Inc. and DWI Holdings Inc.

For the year ended 31st March, 2011, HIMA recorded sales of USD 3.32 Million (Rs.1,510.38 lakhs) as compared to USD 3.55 Million (Rs.1,686.74 lakhs) in the previous year. It recorded a profit before tax of USD 1.97 Million (Rs.884.88 lakhs) as compared to the loss of USD 2.14 Million (Rs.1,023.33 lakhs) for the previous year. The Company received a dividend of USD 5.23 million in current year as compared to USD 0.88 million in the previous year, from its subsidiaries.

Divatex Home Fashions Inc.

For the year ended 31st March, 2011, Divatex Home Fashions Inc. recorded Net sales of USD 140.98 Million (Rs.64,238.69 lakhs) compared to USD 118.89 Million (Rs.56,041.86 lakhs) in the previous year and profit before tax of USD 6.99 Million (Rs.3,197.64 lakhs) compared to USD 3.29 Million (Rs.1,540.37 lakhs) for the previous year. The improved profitability has resulted from an increase in sales of 18.6% aided by new product launches, addition of new customers and significant cost optimization initiatives.

DWI Holdings Inc.

For the year ended 31st March, 2011, DWI Holdings Inc. recorded sales of USD 58.34 Million (Rs.26,603.47 lakhs) compared to USD 49.96 Million (Rs.23,709.93 lakhs) in the previous year and profit before tax of USD 2.43 Million (Rs.1,114.63 lakhs) compared to USD 0.32 Million (Rs.162.28 lakhs) for the previous year. The Company's strategy of distributing brands in various pricing formats resulted in a 16.8% growth in sales. In addition, significant cost optimization initiatives have resulted in a better performance as against the previous year.

Giuseppe Bellora SpA

For the year ended March 31, 2011, Giuseppe Bellora SPA recorded sales of Euro 19.33 Million (Rs.11,658.68 lakhs) compared to Euro 19.19 Million (Rs.12,822.38 lakhs) in the previous year and a loss before tax of Euro 1.14 Million (Rs.687.40 lakhs) compared to a loss before tax of Euro 1.32 Million (Rs.886.94 lakhs) for the previous year.The results have been impacted by the continuing recessionary conditions in the European markets. The cost optimisation measures initiated in the last year have helped to reduce the overall loss for the year.

Twill & Oxford LLC

Twill & Oxford LLC is a subsidiary of the Company, which operates the ATMOSPHERE store at Dubai. For the year ended March 31, 2011, the Company recorded sales of .AED 5.92 Million (Rs.732.97 lakhs) as compared to AED 8.67 Million (Rs. 1,132.61 lakhs) and made a profit of AED 0.43 Million (Rs.54.25 lakhs) as compared to loss of AED 0.46 Million (Rs.110.58 lakhs) for the previous year.

Himatsingka Singapore Pte Limited (HSPL)

HSPL is a wholly owned subsidiary of HWPL and operates a store at Singapore, retailing the ATMOSPHERE brand. For the year ended March 31, 2011, the Company recorded sales of SGD 0.86 Million (Rs.293.88 lakhs) as compared to SGD 1.1 Million (Rs.367.34 lakhs) in the previous year and incurred a loss before tax of SGD 0.46 Million (Rs.220.67 lakhs) as compared to SGD 0.93 Million (Rs.262.39 lakhs) for the previous year.

Annual Accounts of the Subsidiaries

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Proft and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Offce of the Company and that of the respective subsidiary companies and are also available on the Company's website i.e. www.himatsingka.com. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies. Further, a statement containing the particulars prescribed under the terms of the said exemption for each of the Company's subsidiaries, is also forming part of the Consolidated financial statements.

Finance

The Company's surplus funds continue to be invested prudently. As on March 31, 2011, the Company had invested Rs.674.93 lakhs in various schemes of mutual funds.

In accordance with the provisions of the Investor Education and Protection Fund (awareness and protection of investor) Rules, 2001, unpaid and unclaimed dividend (final dividend 2002-03 and interim dividend 2003-04) amounting to Rs.9.71 lakhs was transferred to the Investor Education and Protection Fund.

Personnel

Industrial relations were cordial throughout the year. We continue to train and motivate our workforce, to increase their contribution to the growth of the Company.

Research and Development

Research and development continues to provide valuable support to our exports and has helped us to keep pace with a dynamically changing market. We continue to give in-house research and innovation the highest priority.

Awards

The Company received the "Best EOU (Other than MSME)" under EPCES Export Awards for 2008-09 from the Export Promotion council for EOUs & SEZs.

Environment, Safety, Energy Conservation and Technology Absorption

Safety and environmental protection remain a key area of focus for the Company. Investments are continuously made in projects that reduce/treat waste and increase energy efficiencies.

We regularly upgrade our effluent treatment and water recycling plants to keep abreast with technological advancements. By avoiding carcinogenic azoclass dyes, we ensure eco-friendly production and worker safety. Our endeavor has been to maximize the efficient use of energy and ensure the safe and responsible discharge of residual wastes, while minimizing any adverse environmental impact and waste generation.

Information under section 217(1)(e) read with Companies (Disclosure of particulars in the report of Directors) Rules, 1988 are given in the Annexure, forming part of this report.

Corporate Governance

We comply with the corporate governance code as prescribed by the stock exchanges and SEBI. You will find a detailed report on corporate governance as part of this annual report. The auditor's certificate on compliance with the mandatory recommendations on corporate governance is annexed to this report.

Auditors' Report

The auditors in their report for the year ended 31st March, 2011, has drawn attention to Note 18 (3) of Schedule 19 to the accounts. In this regard, Directors submit as under:

The Company being predominantly in exports is exposed to foreign currency fluctuations on foreign currency assets and forecasted cash flows denominated in foreign currency. The company has a Risk Management Policy and manages the foreign exchange risks under the supervision and guidance of the Risk Management Committee of the Board. As on 31st March, 2011, apart from forward contracts, the Company has one outstanding foreign exchange derivative contract on which attention has been drawn

by the auditors. The determination of the liability on this contract is dependent on the occurrence of a future uncertain event and accordingly, no provision has been made in the accounts for the above contract. The Company will continue to closely monitor the contract through its duration.

Insurance

The Company's assets are prone to risks/ peril. The major risks/ peril are adequately insured.

Directors' Responsibility Statement

As required by the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors' Responsibility Statement is attached as Annexure, forming part of this report.

Foreign Exchange Earnings and Outgoings

(Rs. in lakhs)

Earnings Export (FOB Value) 44,702.29

Interest 360.60

Outgo

Import of Raw Material and other Inputs 16,016.82

Other Expenses 948.80 16,965.62

Net Foreign Exchange Earnings from Operations 28,097.27

Import of Capital Goods 60.08

Directors

In accordance with the provisions of the Companies Act, 1956, and Articles of Association of the Company, Mr.Aditya Himatsingka and Mr. Shrikant Himatsingka retire by rotation and being eligible, offer themselves for re-appointment. Their reappointments is being placed as one of the agenda item in the ensuing Annual General Meeting.

Mr. Berjis M. Desai who was appointed as an Additional Director w.e.f. 8.9.2010 holds office till the date of the ensuing Annual General Meeting. A notice has been received from a member proposing his candidature to the office of a Director. His appointment as a Director is being placed as an agenda item in the ensuing Annual General Meeting.

Group :

The names of the Promoters and entities comprising "group" as defined under the Monopolies and Restrictive Trade Practices ("MRTP") Act, 1969 read with Section 3(1)(e)(i) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 are disclosed below:

1. Nathmal Himatsingka 14. Vikram Himatsingka (minor)

2. A.K. Himatsingka 15. Arjun Himatsingka (minor)

3. Leela Devi Himatsingka 16. Varun Himatsingka (minor)

4. D.K. Himatsingka 17. Orient Silk Pvt Ltd

5. Rajshree Himatsingka 18. Aditya Resources Ltd

6. Aditya Himatsingka 19. Priya Resources Ltd

7. Ranjana Himatsingka 20. Bihar Mercantile Union Ltd

8. Amitabh Himatsingka 21. Awdhan Trading Co. Ltd

9. Supriya Himatsingka 22. Bihar Agents Ltd

10. Priyadarshini Himatsingka 23. Credit Himatsingka Pvt Ltd

11. Shrikant Himatsingka 24. Himatsingka Wovens Pvt Ltd

12. Akanksha Himatsingka 25. Himatsingka Foundation

13. Anuradha Himatsingka

Note: Shareholdings of HUFs, are held in the names of the respective individuals in the capacity of Karta. Hence, HUFs are not separately listed hereinabove.

Particulars of Employees

In terms of provisions of section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended by Companies (Particulars of Employees) Amendment Rules, 2011, there are no employees in the Company receiving a remuneration of not less than Rs.60,00,000 p.a, if employed throughout the financial year and remuneration of not less than Rs.500,000 per month if employed for part of the financial year.

Public Deposits

The Company has not accepted any deposits from the public during the year within the meaning of Section 58A of the Companies Act, 1956.

Auditors

Messers Deloitte Haskins & Sells. (Firm Registration No 008072S) Chartered Accountants, the Company's Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. Members are requested to appoint the auditors and fx their remuneration for the current year.

Cost Auditors

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956, in respect of the audit of Cost Records of the Company, M/s. Rao, Murthy & Associates, Cost Accountants, have been appointed as the Cost Auditor for the financial year 2011-12. The cost audit report for the financial year 2009-10, which was due to be filed with the Ministry of Corporate Affairs by September 30, 2010, was filed on September 25, 2010.

Acknowledgement

Your Directors wish to place on record their appreciation of the unstinting efforts made by all employees in ensuring excellent all-round operational performance. We also wish to thank our Customers, Vendors, Shareholders and Bankers for their continued support. Your Directors would like to express their grateful appreciation to the Central Government and Government of Karnataka for their continued co-operation and assistance.

For and on behalf of the Board

Dilip J Thakkar Chairman

Place : Bangalore Date : May 19, 2011

 
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