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Directors Report of Loyal Textiles Mills Ltd.

Mar 31, 2015

The Directors have great pleasure in presenting their 69th Report on the business and operations of the Company together with the audited statement of accounts for the year ended 31st March 2015.

1. SUMMARISED FINANCIAL HIGHLIGHTS

Financial results for the year under review are as follows:

Rs. in crore, except Earning per share data

Particulars Standalone Consolidated

Particulars 2014-2015 2013-2014 2014-2015

GROSS PROFIT 160.84 179.64 163.29

Less : Interest 68.84 75.81 69.23

OPERATING PROFIT 92.00 103.83 94.06

Less : Depreciation 82.30 70.86 82.93

PROFIT BEFORE TAX 9.70 32.97 11.12

Less: Current Tax 3.45 7.50 4.05

PROFIT AFTER CURRENT TAX 6.25 25.47 7.08

Less: Excess Provision for FBT (0.02) NIL (0.02) of earlier years reversed

Less: Deferred tax (8.72) 8.57 (8.72)

Less: MAT credit NIL (2.80) NIL

PROFIT AFTER DEFERRED 14.99 19.70 15.82 TAX

Add : Surplus brought forward 33.73 20.50 39.69 from previous year

Less: Dividend Tax 0.74 0.61 0.74

Less: Proposed Dividend on 3.61 3.61 3.61 Equity Shares (75%)

Less: Withdrawal on account of 8.45 NIL 8.45 Depreciation as per Schedule II of the Companies Act, 2013

Add: Reversal of Deferred 2.87 NIL 2.87 Tax Liability on account of Transition

Less: Transfer to General Reserve 1.50 2.25 1.55

Balance carried to next year 37.29 33.73 44.03 Earning Per Share

Basic – EPS Per Share 31.13 40.91 32.86

Diluted –EPS per Share 31.13 40.91 32.86

2. DIVIDEND

Your Directors recommend a Dividend of Rs.7.50 (75%) per equity share of Rs.10/- each for the financial year ended 31st March 2015 amounting to Rs.3.61 Crores on which Dividend distribution tax comes to Rs. 0.74 Crores.

The Dividend will be paid to members whose names appear in the Register of Members as on 28th August 2015 and in respect of shares held in dematerialized form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date.

3. SHARE CAPITAL

The paid up Equity Share Capital as on March 31, 2015 was Rs.4.82 crores. During the year under review the company has not issued any shares or any convertible instruments.

4. PERFORMANCE REVIEW, MANAGEMENT DISCUSSIONS, ANALYSIS REPORT AND OUTLOOK FOR THE CURRENT YEAR

The year under review has been a challenging one for the textile industry at large and units in Tamilnadu mills faced more problems due to the poor power situation, forcing mills to buy most of the power required from outside sources.

The windmill power evacuation continues to be going from bad to worse, this year too nearly 3 Crore units produced by the company did not get evacuated, causing a huge loss to our company.

Textile markets in India and globally was severely impacted as the prices of raw materials kept dropping right through the financial year, creating a steady loss in the inventories.

Domestic markets remain weeker than international markets.

The total term loans stand at Rs.308.52 Crores reduced from Rs.341.12 Crores at the end of last fiscal year. Our efforts to deleverage and reduce overall debt is on track.

During the first half of the year, our garment turnover dropped, as our main buyer of our Italian company was doing stock correction at their end in view of falling prices. However the order booking picked up in the second half and continues to be strong.

We have enjoyed cordial relationship with all our stake holders.

We have won several export awards, 5S awards, QC awards and recognition for our CSR full conduct of business.

New businesses :

During the year a 3.3 MW solar power plant has been commissioned at Sattur unit, this is expected to produce nearly 50 lac units per year.

Loyal International Sourcing Private Limited is wholly owned subsidiary company of Loyal Textile Mills Limited has been incorporated and commenced its operations during the year, which will source garments for overseas retail chains.

A Joint Venture has been established in Portugal to secure orders for fashion garments from higher end brand names together with a small manufacturer in Portugal, who has the capability of developing a collection and making small orders for fast turnaround.

Italian Joint Venture

Italian Joint Venture is performing satisfactorily, and has made a profit of 4.67 Lakh Euros pre tax and 2.99 Lakh Euros post tax despite a drop in turnover.

5. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

All amounts which are due to be transferred to the Investor Education and Protection Fund are regularly monitored and transferred. During the year, the Company has transferred a sum of Rs.6.34 Lakhs, being the amount due and payable and remaining unpaid for a period of 7 years, as provided under Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (awareness and protection of investors) Rules 2001. Members who have not encashed the Dividend warrants for the financial year ended 2006-2007 and/or any subsequent years are requested to write to the Company with necessary details before 01.09.2014.

6. EXPORTS

During the year under review, the company exported goods to the tune of Rs. 1220.25 Crores (Previous year Rs.1282.29 Crores).

7. MODERNISATION

A sum of Rs.57.11 Crores (previous year Rs.52.01 Crores) was spent on modernization/ replacement of plant and machinery during the year under review.

8. CREDIT FACILITIES / FINANCE

During the year, the company availed term loans to the tune of Rs.34.79 Crores and repaid loans to the extent of Rs.67.39 Crores to Banks/Financial institutions.

9. FIXED DEPOSITS

During the year all deposits were repaid and there is no unpaid deposits held in our company.

Rs. In Lakhs

Opening 4.47

Add : Availed during the year NIL

Less : Repaid During the year 4.47

Closing NIL

10. DONATION

During the year 2015-16 the Company has paid a donation of Rs.136 Lakhs.

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

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

12. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required pursuant to Section 197(12) read with Rule 5(2) and Rule 5 (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company and Directors is attached as Annexure – B to this report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014 are provided in the Annexure – B to this report.

13. REPORT ON CORPORATE GOVERNANCE

A detailed report on Corporate Governance is annexed to this report as Annexure - C. The Company has complied with the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement. The Managing Director has given a certificate of Compliance with the Code of Conduct, which forms part of Annexure – C as required under Clause 49 of the Listing Agreement.

The Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to Clause 49 of the Listing Agreement and have certified the compliance, as required under Clause 49 of the Listing Agreement.

The Certificate in this regard is attached as Annexure-D to this Report.

The Managing Director and Chief Financial Officer (CFO) certification as required under Clause 41 of the Listing Agreement is attached as Annexure –E to this report.

14. CONSOLIDATED FINANCIAL STATEMENT

The Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards (AS) viz. AS 21, and AS 27 prescribed under Companies (Accounting Standards) Rules, 2006.

15. SUBSIDIARIES AND JOINT VENTURES

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company's Subsidiaries and Joint Ventures (in Form AOC-1) is attached to the financial statements.

Loyal International Sourcing Private Limited (100 % Wholly Owned Subsidiary Company) is started during the year.

The Equity Shares of M/s. Shri Teyem Processors Limited and M/s. Uniloyal Expotex Limited which were hitherto held in investment, have been sold during the year.

16. CORPORATE SOCIAL RESPONSIBILITY (CSR)

In terms of section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of your Company have constituted a CSR Committee. The Committee comprises of three Directors out of which two Directors are Independent Directors and other Director is a Whole Time Director. CSR Committee of the Board has developed a CSR Policy under Health Care activities and Educational Activities which is enclosed as part of this report Annexure - F. The CSR Policy is available at www.loyaltextiles.com under investor info/ policy documents / CSR Policy link.

The company has contributed to a Charitable Trust a sum of Rs. 70. Lakhs which is more than the amount required to be spent u/s.135 of the Companies Act, 2013. The details of amount spent and category, will be published in the next report.

17. VIGIL MECHANISM / WHISTLE BLOWER POLICY

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for Directors and employees to report genuine concerns has been established.

The Vigil Mechanism Policy has been uploaded on the website of the Company at http://www.loyaltextiles.com under investor info/ policy documents/ Whistle Blower Policy link.

18. RELATED PARTY TRANSACTIONS

Related party transactions that were entered during the financial year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval.

Particulars of contracts or arrangements with related parties referred to in section 188(1) of the companies Act, 2013 in the prescribed form AOC-2 is attached as Annexure – G. Also Refer Note No.47 of Financial statement which sets out the transactions with related parties.

The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules there under and the Listing Agreement. This Policy was considered and approved by the Board has been uploaded on the website of the Company at www.loyaltextiles.com under investor info/ policy documents Related Party Transaction Policy link.

19. RISK MANAGEMENT POLICY

In accordance with Clause 49 of the Listing Agreement the board members were informed about risk assessment and minimization procedures after which the board formally adopted steps for framing, implementing and monitoring the risk management plan for the company.

The main objective of this policy is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to risk management, in order to guide decisions on risk related issues.

In today's challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the company are imperative. The common risks inter alia are: regulations, competition, business risk, technology obsolescence, investments, and retention of talent and expansion of facilities.

Business risk, inter-alia, further includes financial risk, political risk, fidelity risk and legal risk.

As a matter of policy, these risks are assessed and steps as appropriate are taken to mitigate the same.

20. REMUNERATION POLICY OF THE COMPANY

The remuneration policy of the company comprising the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters has been provided in the Corporate Governance Report which is attached as Part III to Para- 2 of Annexure – C to this report.

21. DIRECTORS, KEY MANAGERIAL PERSONNEL & COMMITTEES

At the 68TH Annual General Meeting of the company held on 11th September, 2014 the company had appointed the existing independent directors Shri K.J.M Shetty (DIN 00033296), Shri.S.Venkataramani (DIN 00053043), Shri.R.Poornalingam (DIN. 00955742), Shri. Shridhar Subrahmanyam (DIN. 01780475) and, Shri. M. Madhavan Nambiar (DIN. 03487311) as independent directors not liable to retire by rotation under the companies Act, 2013 for 3 consecutive years for a term up to the conclusion of the 71st Annual General Meeting.

The Key Managerial personnel’s namely Company Secretary Mr.M.Arumugam was appointed in the Board Meeting held on 12th August 2013 and Chief Financial Officer Mr.R.Mohan was appointed during the year in the Board Meeting held on 01st August 2014.

All independent directors have given declaration that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and Clause 49 of Listing Agreement.

At a Board Meeting held on 11th February 2015 the board had appointed Smt. Valli M Ramaswami (DIN 00036508) as an Additional director (Woman director) and in the same Board Meeting she was appointed as a Whole Time Director of the company.

21.1 AUDIT COMMITTEE

The company is having Audit Committee comprising of following Directors.

NAME STATUS CATEGORY

Shri. K.J.M.Shetty Chairman Independent Director

Shri.S.Venkataramani Member Independent Director

Shri.Shridhar Member Independent Director Subrahmanyam

21.2 NOMINATION AND REMUNERATION COMMITTEE

The company is having a Nomination and Remuneration Committee comprising of the following directors:

NAME STATUS CATEGORY

Shri. K.J.M.Shetty Chairman Independent Director

Shri.S.Venkataramani Member Independent Director

Shri.R.Poornalingam Member Independent Director

21.3 CSR COMMITTEE

The company is having a Corporate Social Responsibility Committee comprising of the following directors:

NAME STATUS CATEGORY

Shri. K.J.M.Shetty Chairman Independent Director

Shri. M. Madhavan Nambiar Member Independent Director

Shri.P.Manivannan Member Whole Time Director

21.4 STAKEHOLDERS' RELATIONSHIP COMMITTEE

The company is having a Stakeholders' Relationship Committee comprising of the following directors:

NAME STATUS CATEGORY

Shri. K.J.M.Shetty Chairman Independent Director

Shri.S.Venkataramani Member Independent Director

Shri.P.Manivannan Member Whole Time Director

21.5 RISK MANAGEMENT COMMITTEE

The company is having a Risk Management Committee comprising of the following directors:

NAME STATUS CATEGORY

Shri. Manikam Ramaswami Chairman Managing Director

Shri.P.Manivannan Member Whole Time Director

Shri.M.E.Manivannan Member Senior Vice President (Operations)

22. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditor of the company checks and verifies the internal control and monitors them in accordance with policy adopted by the company.

23. DIRECTORS' RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the March 31, 2015 end of the profit of the company for the year ended on that date ;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concern basis;

e) the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively; and

f) the Directors had devised proper system to ensure that systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

24. LISTING

The Company's equity shares continue to be listed on the Bombay Stock Exchange, Mumbai. The listing fee for the financial year 2014 – 2015 has been paid to BSE and the Annual Custodian fee has been paid to the NSDL and CDSL for the financial year 2014-15

25. AUDITORS

25.1 STATUTORY AUDITORS

M/s. Suri & Co (Firm Regn No:004283S.), Chartered Accountants, have been appointed as statutory auditors of the company at the 68th Annual General Meeting held on 11.09.2014 for a period of three years subject to ratification by members at every consequent Annual General Meeting. Therefore, ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing AGM.

The Statutory Auditors' Report to the shareholders does not contain any qualification.

25.2 SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Krishna Sharan Mishra (FCS No.6447) representing KSM Associates, Company Secretaries, Chennai, to undertake the secretarial audit of the company. The Secretarial Audit Report is annexed herewith as Annexure - H.

The Secretarial Auditors' Report to the shareholders does not contain any qualification.

25.3 INTERNAL AUDITORS

M/S. SLSM & CO, Associates, Chartered Accountants performs the duties of internal auditors of the company and their report is reviewed by the audit committee from time to time.

25.4 COST AUDITOR

Mr.V.Balasubramanian, Cost Accountant was appointed as Cost Auditor for auditing the cost accounts of your Company for the year ended 31st March, 2015 by the Board of Directors. The Cost Audit Report for the year 2013-14 has been fled under XBRL mode within the due date of fling.

26. EXTRACT OF ANNUAL RETURN

An extract of the Annual return in form- MGT- 9 as on March 31, 2015 is attached as Annexure – I to this report.

27. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or investments or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement (Refer Note No. 11).

28. BUSINESS RESPONSIBILITY STATEMENT

1. The company shall comply with all the statutes and the rules of regulating authorities.

2. It is the responsibility of the company to share the wealth of the company with our Share holders.

3. When it comes to the caring of environment, Loyal does not believe in seeking benefits from the government but leaving it with the government for greater good and being morally fair to our customers, employees, suppliers etc., The Company has great respect for environment.

4. Believe in empowering the society through education.

29. GENERAL

A. Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

3. Neither the Managing Director nor the Whole- time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. Attention is drawn to the Note No. 39 regarding letter from BSE for which suitable reply has been fled.

B. A copy of the Financial Statements including Consolidated Financial Statements, Directors Report, Auditors Report etc., is available at the Registered office of the Company for the inspection of the members of the company during the office hours up to the date of Annual General Meeting.

C. The Company has not furnished the statement of Changes in Equity as the required format has not yet been prescribed.

D. Your Directors further state, as per information furnished by POSH Committee, during the year under review, there were no cases fled pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

30. ACKNOWLEDGEMENT

Your Directors wish to acknowledge the co-operation and assistance extended by Exim Bank, Central Bank of India, State Bank of India, Karur Vysya Bank Ltd., Indian Bank and State Bank of Mysore. Your Directors appreciate the continued co- operation extended by staff and workers of the company and look forward to the same cordial relationship in the coming years.

For and on behalf of the Board of Directors

P. MANIVANNAN MANIKAM RAMASWAMI

Whole Time Director Managing Director

Place: Chennai

Date: 28th May 2015


Mar 31, 2014

Dear members,

The Directors have great pleasure in presenting their 68th Annual Report on the business and operations of the Company together with the audited statement of accounts for the year ended 31st March 2014.

WORKING RESULTS

Financial results for the year under review are as follows :

(Rs. in Crores) Year ended 31st March 2014

GROSS PROFIT 179.64

Less : Interest 75.81

OPERATING PROFIT 103.83

Less : Depreciation 70.86

PROFIT BEFORE TAX 32.97

Less: Current Tax 7.50

PROFIT AFTER CURRENT TAX 25.47

Provision for Deferred tax Liability 8.57

MAT Credit (2.80)

PROFIT AFTER DEFERRED TAX 19.70

Add : Surplus brought forward from previous year 20.50

Less : Dividend Tax 0.61

Less : Proposed Dividend on Equity Shares (75%) 3.61

Less : Transfer to General Reserve 2.25

BALANCE CARRIED TO NEXT YEAR 33.73

DIVIDEND

Your Directors recommend a dividend of Rs. 7.50 (75%) per equity shares of Rs.10/- each for the financial year ended 31st March 2014

PERFORMANCE REVIEW, MANAGEMENT DISCUSSIONS, ANALYSIS REPORT AND OUTLOOK FOR THE CURRENT YEAR :

The performance during the year 2013-2014 under review was satisfactory.

We had completed the laying of dedicated electrical lines to all our units, this proved very useful. We were able to get better quality of power and were able to wheel the power we produced through wind mills and purchased power.

However the poor evacuation of power generated by our wind mills caused a huge loss of about Rs. 15 crores.

Quality of power however continues to be very poor, the number of tripping, power outage due to poor quality of distribution infrastructure continues to be a serious problem.

The textile markets by and large remained good and we were able to increase our turnover substantially. Exports of yarn however did not result in profits due to large scale default of contracts by Chinese importers.

We invested 32.75 crores in capital equipments, availed 32.75 crores new term loans and repaid 74.64 crores term loans.

The total term loans stand at Rs. 341.08 crores reduced from Rs. 383.22 crores at the end of last fiscal year. Our efforts to deleverage our debt is on track.

We have been able to identify new markets for all our products and will be able to increase value added exports in the coming year.

We have enjoyed cordial relationship with all our stake holders

We have won several export awards, 5S awards, QC awards and recognition for our CSR full conduct of business.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

All amounts which are due to be transferred to the Investor Education and Protection Fund are regularly monitored and transferred. During the year, the Company has transferred a sum of Rs. 5.67 Lakhs, being the amount due and payable and remaining unpaid for a period of 7 years, as provided under Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (awareness and protection of investors) Rules, 2001. Members who have not encashed the Dividend warrants for the financial year ended 2006- 2007 and/or any subsequent years are requested to write to the Company with necessary details before 01.09.2014.

EXPORTS

During the Year under review, the company exported goods to the tune of Rs. 1282.29 crores.

MODERNISATION :

A sum of Rs. 52.01 Crores (Previous year Rs. 74.60 Crores) was spent on modernization / replacement of plant and machinery during the year under review.

FINANCE :

During the year, the Company availed term loans to the tune of Rs.32.74 Crores and repaid loans to the extent of Rs. 74.56 Crores to Banks/ Financial institutions.

FIXED DEPOSITS :

Deposits aggregating to Rs. 1.70 lakhs remained unclaimed as on 31st March 2014. No deposit has since been renewed / repaid.

DONATION :

During the year 2013-2014 the company has paid a donation of Rs. 205.61 Lakhs.

DIRECTORS :

In accordance with the provisions of the Companies Act, 2013, Mr. K.J.M. Shetty, Director and Mr. Madhavan Nambiar, Director retire by rotation and are eligible for reappointment.

DIRECTORS'' RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT, 1956.

The Directors hereby state :-

I) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures.

ii) that the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year;

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

iv) that the directors have got prepared the annual accounts on a going concern basis.

LISTING :

The Company''s equity shares continue to be listed on the Bombay Stock Exchange, Mumbai. The listing fees for the financial year 2014-2015 has been paid to BSE and the Annual Custodian fee has been paid to the NSDL and CDSL for the financial year 2014-15.

AUDITORS :

M/s. Suri & Co., Chartered Accountants, Auditors of the Company retires at this Annual General Meeting and are eligible for reappointment. The Company has received a letter from M/s. Suri & Co to the effect that their appointment as auditors, if made, would be within the limits as provided under the required provisions of the companies Act, 2013.

The Auditors Report to the shareholders does not contain any qualification.

COST AUDITOR

The Central Government has approved the appointment of Mr. V.BALASUBRAMANIAN as Cost Auditor of the Company to do Cost Audit for the financial year 2014-15.

REPORT ON CORPORATE GOVERNANCE

A detailed report on Corporate Governance is annexed to this report. The Company has complied with the conditions of Corporate governance as stipulated in clause 49 of the listing agreement. The certificate obtained from the auditors of the Company regarding compliance of conditions is annexed to this report.

PARTICULARS OF EMPLOYEES :

As required by Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, a statement of information relating to the employees has been given in the Annexure, which forms part of this Report.

PARTICULARS OF ENERGY CONSUMPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required as per Section 217 (1)(e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 is given in the annexure, which forms part of this report. ACKNOWLEDGEMENT

Your Directors wish to acknowledge the co-operation and assistance extended by Exim Bank, Central Bank of India, State Bank of India, Karur Vysya Bank Ltd., Indian Bank, State Bank of Mysore and Indian Overseas Bank. Your Directors appreciate the continued co- operation extended by staff and workers of the company and look forward to the same cordial relationship in the coming years.

For and on behalf of the Board of Directors

Place : CHENNAI MANIKAM RAMASWAMI Date : 23 May, 2014. Chairman & Managing Director


Mar 31, 2013

TO THE MEMBERS

The Directors have great pleasure in presenting their 67th Annual Report on the business and operations of the Company together with the audited statement of accounts for the year ended 31st March 2013.

WORKING RESULTS

Financial results for the year under review are as follows :

(Rs. in Crores) Year ended 31st March 2013

GROSS PROFIT 142.04

Less : Interest 61.72

OPERATING PROFIT 80.32

Less : Depreciation 69.11

PROFIT BEFORE TAX 11.21

Less: Current Tax 3.02

PROFIT AFTER CURRENT TAX 8.19

Provision for Deferred tax Liability 15.00

MAT Credit (11.85)

PROFIT AFTER DEFERRED TAX 5.04

Add : Surplus brought forward from previous year 19.29

Less : Dividend Tax 0.42

Less : Proposed Dividend on Equity Shares (50%) 2.41

Less : Transfer to General Reserve 1.00

BALANCE CARRIED TO NEXT YEAR 20.50

DIVIDEND

Your Directors recommend a dividend of Rs. 5.00 (50%) per equity shares of Rs.10 each/- for the financial year ended 31st March 2013

PERFORMANCE REVIEW, MANAGEMENT DISCUSSIONS, ANALYSIS REPORT AND OUTLOOK FOR THE CURRENT YEAR :

The year under review, 2012-2013 was a better year than the previous year. The ill effects of yarn export ban had been fully digested. However the wide fluctuations in exchange rate, impacted the profit and loss, while change over from $ packing credit to Rupee packing credit.

During the year, the direct transmission cables were laid to our Kovilpatti unit in October and to our CTM unit during February. We have spent over 6 crores in capital expenditure and over 2 crores in revenue expenditure to get these direct transmission cables laid and on the creation of the substation. The power situation at both units have improved since, CTM unit has since turned profitable.

India''s textile competitiveness is gradually improving and today at the yarn stage we are the most competitive manufacturer globally, at the fabric stage there are a few smaller manufacturers who are apparently more competitive but in real terms are not due to severe power constraints besides socio - political issues.

Our turnover increased to Rs. 1247.39 crores and exports increased to Rs. 935.42 crores.

The total cash generated before interest, depreciation and taxes is Rs. 142.04 crores. After interest, and taxes it is Rs. 74.15 crores. The net profit after all expenses and provisions is Rs. 5.04 crores. The Dividend proposed is 50% and would need Rs. 2.41 crores.

During the year Rs. 75.80 crores of capital work was undertaken. Additional borrowings were Rs. 31.00 crores. The net reductiion in borrowings net of new borrowings is Rs. 37.54 crores. We have after many years started reducing the total borrowings even as we are steadily improving our turnover.

We were able to tighten the receivables and keep a tight control over inventories during the year which helped in improved cash flow.

The prospects for the current year appears to be better and we hope to improve both Top and Bottom line by at least 20%

We enjoyed excellent industrial relation at all our unit and the employee strength stands at 5948.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

All amounts which are due to be transferred to the Investor Education and Protection Fund are regularly monitored and transferred. During the year, the Company has transferred a sum of Rs. 5.47 Lakhs, being the amount due and payable and remaining unpaid for a period of 7 years, as provided under Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (awareness and protection of investors) Rules, 2001. Members who have not encashed the Dividend warrants for the financial year ended 2005-2006 and/or any subsequent years are requested to write to the Company with necessary details before 27.10.2013.

EXPORTS

During the Year under review, the company exported goods to the tune of Rs. 935.42 crores.

MODERNISATION :

A sum of Rs. 74.60 Crores (Previous year Rs. 151.42 Crores) was spent on modernization / replacement of plant and machinery during the year under review.

FINANCE :

During the year, the Company availed term loans to the tune of Rs.31.00 Crores and repaid loans to the extent of Rs. 74.68 Crores to Banks/ Financial institutions.

FIXED DEPOSITS :

4 deposits aggregating to Rs. 0.92 lakhs remained unclaimed as on 31st March 2013. No deposit has since been renewed / repaid.

DONATION :

During the year 2012-2013 the company has paid a donation of Rs.101.47 Lakhs.

DIRECTORS :

In accordance with the provisions of the Companies Act, 1956, Mr. R. Poornalingam, Director and Mr. Shridhar Subrahmanyam, Director retire by rotation and are eligible for reappointment.

DIRECTOR''S RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT, 1956.

The Directors hereby state :-I) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures.

ii) that the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year;

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

iv) that the directors have got prepared the annual accounts on a going concern basis.

LISTING :

The Company''s equity shares continue to be listed on the Bombay Stock Exchange, Mumbai. The listing fees for the financial year 2013-2014 has been paid to BSE and the Annual Custodian fee has been paid to the NSDL and CDSL for the financial year 2013-14.

AUDITORS :

M/s. Suri & Co., Chartered Accountants, Auditors of the Company retires at this Annual General Meeting and are eligible for reappointment. The Company has received a letter from

M/s. Suri & Co to the effect that their appointment as auditors, if made, would be within the limits of Section 224(1-B) of the Companies Act, 1956.

The Auditors Report to the shareholders does not contain any qualification except for the observation made by the Auditors regarding change in the method of depreciation on windmills and its effect on profit / assets.

COST AUDITOR

The Central Government has approved the appointment of Mr. V.BALASUBRAMANIAN as Cost Auditor of the Company to do Cost Audit for the financial year 2012-13.

REPORT ON CORPORATE GOVERNANCE

A detailed report on Corporate Governance is annexed to this report. The Company has complied with the conditions of Corporate governance as stipulated in clause 49 of the listing agreement. The certificate obtained from the auditors of the Company regarding compliance of conditions is annexed to this report.

PARTICULARS OF EMPLOYEES :

As required by Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, a statement of information relating to the employees has been given in the Annexure, which forms part of this Report.

PARTICULARS OF ENERGY CONSUMPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required as per Section 217 (1)(e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 is given in the annexure, which forms part of this report.

ACKNOWLEDGEMENT

Your Directors wish to acknowledge the co-operation and assistance extended by Exim Bank, Central Bank of India, State Bank of India, Karur Vysya Bank Ltd., Indian Bank, State Bank of Mysore and Indian Overseas Bank. Your Directors appreciate the continued co- operation extended by staff and workers of the company and look forward to the same cordial relationship in the coming years.

For and on behalf of the Board of Directors

Place : CHENNAI MANIKAM RAMASWAMI

Date : 24th May, 2013. Chairman & Managing Director


Mar 31, 2012

The Directors have great pleasure in presenting their 66 th Report on the business and operations of the Company together with the audited statement of accounts for the year ended 31st March 2012.

WORKING RESULTS

Financial results for the year under review are as follows :

(Rs. in Crore) For Year ended 31st March 2012

GROSS PROFIT 103.29

Less : Interest 43.79

OPERATING PROFIT 59.5

Less : Depreciation 66.2

LOSS BEFORE TAX (6.70)

Add : Excess Provision Written Back 2.31

LOSS AFTER CURRENT TAX (4.40)

Provision for Deferred Tax - Asset 2.45

LOSS AFTER DEFERRED TAX (1.95)

Add : Surplus brought forward from previous year 24.22

PROFIT FOR THE YEAR CARRIED TO THE NEXT YEAR 22.28 PROPOSED DIVIDEND ON EQUITY SHARES (10%) 0.48 PROVISION FOR TAX ON DISTRIBUTED PROFITS 0.08 TRANSFER TO GENRAL RESERVE 2.43 BALANCE CARRIED TO NEXT YEAR 19.29 DIVIDEND

Your Directors recommend a dividend of Rs.1.00 (10%) per equity shares of Rs. 10 each/- for the financial year ended 31st March 2012 out of free reserves of the Company.

PERFORMANCE REVIEW, MANAGEMENT DISCUSSION, ANALYSIS REPORT AND OUTLOOK FOR THE CURRENT YEAR :

The year 2011 -2012 was an extremely challenging year, especially for textile mills in South India.

Last year's government decision to first ban cotton and later yarn had destroyed demand due to huge price increase that happened while the export ban was in force in the International markets. The ban ensured that Indian mills did not benefit from the high prices but were severely impacted when prices crashed to 50% level post lifting of the ban.

When trading conditions slowly returned to normal from the impact of Indian governments inexplicable actions. Both Tamilnadu and Andhra Pradesh where we have our units faced severe power problems and the mills were badly impacted.

35% power shortage in Tamilnadu resulted in almost 90% shortage to mills and industries in South and West Tamilnadu due to TNEBs discrimination. Units in and around Chennai, Cement, Steel, Flour mills and a few others managed to get themselves exempt from the severe power restrictions. This large scale discrimination resulted in others bearing nearly 90% power cuts.

In Andhra Pradesh too the power situation was bad with up to 3 days power holidays per week besides peak hour restrictions.

As a result of adverse trading conditions during the first half and severe power constraints later we were forced to incur net loss.

The steep increase in interest costs, disallowance of TUF rebate for investments made during the shadow period when the government was contemplating of the extension of TUF etc steeply increased our Interest burden.

Our efforts to get a dedicated line to kovilpatti unit which was suffering over 10 hours of power outage every day being linked to Kovilpatti town feeder fructified only in June. We have invested over 6 crores for the same. In the coming months thanks to our dedicated feeder we will be able to get continuous power to the extent that we generate using our wind mills and third party purchase.

We have augmented our power supply position to take our own power to 80% of our requirement by additional investment in wind mills and purchase of power, as two of our 3 units in Tamilnadu have dedicated feeders.

Working is going on to create a new substation near our third unit, once the substation gets commissioned, we will be able to lay a dedicated line to our third unit as well.

India despite its various infrastructural and policy issues is fast emerging as the most competitive destination for yarns and grey fabric, the few aberrations in draw back affecting fabric exports are expected to be corrected in this years draw back policy. We expect a normal year with reasonable net profits as we have taken adequate measures to overcome last year's issues.

The turnover dropped marginally to Rs. 910.60 Crores due to lower per unit realization and power constraints in spite of commissioning our new unit.

Cash generation during the year was Rs. 59.51 Crores, Repayments made Rs. 39.43 Crores, capital investments made Rs. 163.85 Crores, and loans availed Rs. 98.36 Crores.

We were able to tighten the receivables and keep a tight control over inventories during the year which helped in improved cash flow.

As we have little capital work in progress and no new projects except the 2 wind mills we expect to have a comfortable cash flow situation and will be able to bring down our borrowings especially the non TUF portion during this year.

We enjoyed excellent industrial relation at all our units and the employee strength stands at 4271.

Dividends, as we have sufficient carry forward in our profit and loss account even though we have incurred a net loss, it is proposed to declare a dividend of 10%.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

All amounts which are due to be transferred to the Investor Education and Protection Fund are regularly monitored and transferred. During the year, the Company has transferred a sum of Rs. 4.60 Lakhs, being the amount due and payable and remaining unpaid for a period of 7 years, as provided under Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (awareness and protection of investors) Rules, 2001. Members who have not encased the Dividend warrants for the financial year ended 2004-2005 and/ or any subsequent years are requested to write to the Company with necessary details before 11.07.2012.

EXPORTS

During the Year under review, the company exported goods to the tune of Rs. 715.11 crores.

MODERNISATION :

A sum of Rs. 151.42 Crores (Previous year Rs. 128.07 Crores) was spent on modernization / replacement of plant and machinery during the year under review.

FINANCE :

During the year, the Company availed term loans to the tune of Rs. 98.36 Crores and repaid loans to the extent of Rs. 40.83 Crores to Banks/ Financial institutions.

FIXED DEPOSITS :

4 deposits aggregating to Rs. 2.91 lakhs remained unclaimed as on 31st March 2012. No deposit has since been renewed / repaid.

DONATION :

During the year 2011-2012 the company has paid a donation of Rs. 6.51 Lakhs.

DIRECTORS :

In accordance with the provisions of the Companies Act, 1956, Mr. K.J.M Shetty, Director and Mr. S.Venkataramani Director retire by rotation and are eligible for reappointment.

DIRECTOR'S RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT, 1956.

The Directors hereby state :-

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures.

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

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

d) that the directors have got prepared the annual accounts on a going concern basis.

LISTING :

The Company's equity shares continue to be listed on the Bombay Stock Exchange, Mumbai. The listing fees for the financial year 2012-2013 has been paid to BSE and the Annual Custodian fee has been paid to the NSDL and CDSL for the financial year 2012- 13

AUDITORS :

M/s. Suri & Co., Chartered Accountants, Auditors of the Company retires at this Annual General Meeting and are eligible for reappointment. The Company has received a letter from M/ s. Suri & Co to the effect that their appointment as auditors, if made, would be within the limits of Section 224(1-B) of the Companies Act, 1956.

The Auditors Report to the shareholders does not contain any qualification.

COST AUDITOR

The Central Government has approved the appointment of Mr. V.BALASUBRAMANIAN as Cost Auditor of the Company to do Cost Audit for the financial year 2011-12.

REPORT ON CORPORATE GOVERNANCE

A detailed report on Corporate Governance is annexed to this report. The Company has complied with the conditions of Corporate governance as stipulated in clause 49 of the listing agreement. The certificate obtained from the auditors of the Company regarding compliance of conditions is annexed to this report.

PARTICULARS OF EMPLOYEES :

As required by Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, a statement of information relating to the employees has been given in the Annexure, which forms part of this Report.

PARTICULARS OF ENERGY CONSUMPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required as per Section 217 (1 )(e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 is given in the annexure, which forms part of this report.

ACKNOWLEDGEMENT

Your Directors wish to acknowledge the co-operation and assistance extended by Exim Bank, Central Bank of India, State Bank of India, Karur Vysya Bank Ltd., Indian Bank, State Bank of Mysore and Indian Overseas Bank. Your Directors appreciate the continued co-operation extended by staff and workers of the company and look forward to the same cordial relationship in the coming years.

For and on behalf of the Board of Directors

Place: CHENNAI MANIKAM RAMASWAMI

Date : 11th May, 2012. Chairman & Managing Director


Mar 31, 2011

TO THE MEMBERS

The Directors have great pleasure in presenting their 65th Report on the business and operations of the Company together with the audited statement of accounts for the year ended 31st March 2011.

WORKING RESULTS

Financial results for the year under review are as follows :

(Rs. in Crore)

For Year ended 31st March 2011

GROSS PROFIT 127.79

Less : Interest 23.94

OPERATING PROFIT 103.85

Less : Depreciation 50.38

PROFIT BEFORE TAX 53.47

Less : Provision for Current Tax 14.72

PROFIT AFTER CURRENT TAX 38.75

Provision for Deferred Tax 7.37

PROFIT AFTER DEFERRED TAX 31.38

Add : Surplus brought forward from previous year 3.72

PROFIT FOR THE YEAR

After transferring Rs. 3.20 Crore to General Reserve,Your Directors recommend the balance of Rs. 31.90 Crore be appropriated as under: 31.90

Interium Dividend @100% 4.70

Dividend Tax 0.78

PROPOSED DIVIDEND ON EQUITY SHARES (39%) 1.88

PROVISION FOR TAX ON DISTRIBUTED PROFITS 0.30

BALANCE CARRIED TO NEXT YEAR 24.24

DIVIDEND

The Company has paid an Interim dividend of Rs. 10/- per equity share on 47,03,946 equity shares of Rs. 10/- each for the year ended on 31.03.2011 and your Directors recommend a Dividend of Rs. 3.90 (39%) per equity share of Rs. 10/- each for the financial year ended 31st March 2011.

PERFORMANCE REVIEW, MANAGEMENT DISCUSSION, ANALYSIS REPORT AND OUTLOOK FOR THE CURRENT YEAR :

The year under-review has been a water shed for Indian spinning industry in particular and the textile industry in general.

The Government of India restricted its cotton exports and created a disconnect between Indian cotton prices and global cotton prices. India cotton ruled at 15 to 20 % lower than international prices, and this substantially helped the spinning mills to post record profits.

By the same token the government later banned yarn exports for three and a half months, which has led to unprecedented losses to spinning mills starting from March of 2011 and the losses will last until October 2011; many mills may incur more losses than what they gained through the availability of cheaper cotton.

We have always aligned our interest with that of the country, although it was temporarily much more profitable to stay with spinning, and expand spinning, we felt that the country will need more weaving and knitting capacities. With increasing wages more and more of India's large power loom capacity will become redundant and with demand for longer piece length of defect free cloth, the demand for high quality weaving will keep going up. Realising this medium term reality, at Loyal we have concentrated on adding fabric making capacities ; by end of the calendar year we would have almost doubled both weaving and kniting capacities. Thanks to our policy of aligning with what is good for the country and not what is best suited asper the distorted Government policies at that point of time, which swing from one extreme of incentivised exports of subsidised cotton to total ban on exports of cotton or irrationally high DEPB to total withdrawal of all draw back on cotton yarn, we are experiencing a more balanced working.

During the review period we had severe power cuts and load shedding all of which cost us huge additional costs. Additional costs were incurred due to purchase of very expensive third party power, in order to overcome this additional cost as well as to have control over power costs despite SEB's raising the tariff from time to time, we have invested Rs. 54 crores in wind mills which would add 60,000/-units per day on an average to our own generation, in addition we have taken up several initiatives to reduce specific power consumption.

During this financial year we will not need to purchase any third party power and would be saving several crores of rupees spent during the last financial year.

Wage costs are rising steeply and availability of work force to work in all 3 shifts is getting more and more difficult, in order to overcome the problems caused by this factor, we are increasing the automation and increasing the sewing machine capacity to get maximum output during the day shift itself.

The current financial year 2011-2012 will be an extremely challenging one, especially the first half, for the spinning mills in pariticular and textile mills in general, as the cost of cotton, yarn and fabrics has dropped by 50% to 20%; and the calculated loss for the textile industry in India alone is 2 billion $ and almost another 2 billion to textile companies in Asia, Indian Government't policy of banning cotton exports first and later yarn exports has been mainly responsible for this disaster, given India's prominent position in global trade in these two commodities.

The Global demand desstruction caused due the faulty policies of the Indian Government is seriously impacting the industry globally. In addition the high interest rate together with slow industrial growth is affecting the inclusive growth and the surplus available with the poor is dropping which in turn affects textile off take in the domestic markets. Prices have started dropping rapidly. When the new prices reach the retail counters and demand gets restored we will see improvements in off take and prices. It is expected, given the inventories with the mills and trade, the improvement will happen during the second half of the financial year.

We will however be able to weather the storm and post profits as we have always aligned our policies with what is good for the Nation and resisted the temptation of aligning our policies with the irrational and temporary benefits given to different sectors from time to time extreme swings.

The turnover increased from Rs.462.49 Crores to 962.45 Crores. It was possible due to increased volume of trade as well as due to the substantial increase in unit value due to inflation. Exports accounted for 769.86 Crores, we won the award for the highest export of grey fabrics for the 4 years in row and expect to win it again for the current year's performance as well.

We have invested Rs 56.14 Crores in our existing facilities to improve quality, and to reduce labour dependence and power consumption, Rs.54 Crores in wind mills and Rs.67.09 Crores in our new unit in the state of Andhra Pradesh, which has several advantages over Tamilnadu such as lower cost of power, less power interruption and load shedding, transparent grid administration, lower cost of labour, lower cost of cotton as AP is a cotton surplus state. When completed AP plant willhave 200 looms and enough spinning to produce the required warp yarns. Weft yarns can be sourced from the many mills in the vicinity.

Industrial relations: The Company has cordial industrial relations at all its plants, the total employee strength stands at 4475.

Dividends : This year we have given a total dividend of 139% including the interim dividend.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

All amounts which are due to be transferred to the Investor Education and Protection Fund are regularly monitored and transferred. During the year, the Company has transferred a sum of Rs. 3.51 Lakhs, being the amount due and payable and remaining unpaid for a period of 7 years, as provided under Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (awareness and protection of investors) Rules, 2001. Members who have not encashed the Dividend warrants for the financial year ended 2003-2004 and / or any subsequent years are requested to write to the Company with necessary details before 16.10.2011.

EXPORTS

During the Year under review, the company exported goods to the tune of Rs. 769.86 crores.

MODERNISATION :

A sum of Rs. 128.07 crores (Previous year Rs. 5.94 crores) was spent on modernization / replacement of plant and machinery during the year under review.

FINANCE :

During the year, the Company availed term loans to the tune of Rs. 136.06 crores and repaid loans.to the extent of Rs. 28.60 crores to Banks / Financial institutions.

FIXED DEPOSITS :

4 deposits aggregating to Rs. 2.04 lakhs remained unclaimed as on 31st March 2011. No deposit has since been renewed / repaid.

DONATION :

During the year 2010-2011, the company have paid a donation of Rs. 2.50 crores in antacipation of the approval of the shareholders. Accordingly the board seeks the ratification and approval during the Annual General Meeting for the making donations upto Rs. 5 crores.

DIRECTORS :

In accordance with the provisions of the Companies Act, 1956, Mr. R.Poornalingam, Director and Mr. P. Manivannan retire by rotation and are eligible for reappointment.



DIRECTOR'S RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT, 1956.

The Directors hereby state :-

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures.

b) that the directors have selected such accounting policies and appliedthem consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year;

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

d) that the directors have got prepared the annual accounts on a going concern basis.

LISTING :

The Company's equity shares continue to be listed on the Bombay Stock Exchange, Mumbai. The listing fees for the year 2011-2012 has been paid.

AUDITORS :

M/s. Suri & Co., Chartered Accountants, Auditors of the Company retire at this Annual General Meeting and are eligible for ..reappointment. The Company has received a letter from M/s. Suri & Co to the effect that their appointment as auditors, if made, would be within the limits of Section 224(1 -B) of the Companies Act, 1956.

The Auditors Report to the shareholders does contain a qualifications with regard to the payment of (he DuntUiun of Rs,2,50 Crores to a Charitable Trust, which is subject to sanction by the Shareholders at the ensuring Annual General Meeting.

REPORT ON CORPORATE GOVERNANCE

A detailed report on Corporate Governance is annexed to this report. The Company has complied with the conditions of Corporate governance as stipulated in clause 49 of the listing agreement. The certificate obtained from the auditors of the Company regarding compliance of conditions is annexed to this report.

PARTICULARS OF EMPLOYEES :

As required by Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, a statement of information relating to the employees has been given in the Annexure, which forms part of this Report.

PARTICULARS OF ENERGY CONSUMPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required as per Section 217 (1)(e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 is given in the annexure, which forms part of this report.

ACKNOWLEDGEMENT

Your Directors wish to acknowledge the co-operation and assistance extended by Exim Bank, Central Bank of India, State Bank of India, Karur Vysya Bank Ltd., Indian Bank, State Bank of Mysore and Indian Overseas Bank. Your Directors appreciate the continued co- operation extended by staff and workers of the company and look forward to the same cordial relationship in the coming years.

For and on behalf of the Board of Directors MANIKAM RAMASWAMI Chairman & Managing Director

Place : CHENNAI Date : 27th May, 2011.


Mar 31, 2010

The Directors have great pleasure in presenting their 64 th Report on the business and operations of the Company together with the audited statement of accounts for the year ended 31st March 2010.

WORKING RESULTS

Financial results for the year under review are as follows :

(Rs. in Crore)

For Year ended 31st March 2010

GROSS PROFIT 68.98

Less :Interest 21.13

OPERATING PROFIT 47.85

Less :Depreciation 44.86

PROFIT BEFORE TAX 2.99

Less:Provision for Current Tax 0.99

PROFIT AFTER CURRENT TAX 2.00

Less : Provision for Deferred Tax 0.03

PROFIT AFTER DEFERRED TAX 1.97

Add : Surplus brought forward from previous year --

PROFIT FOR THE YEAR 1.97

After transferring Rs. 0.20 Crore to General Reserve, your Directors recommend the balance of Rs. 1.77 Crore be appropriated as under :

PROPOSED DIVIDEND ON EQUITY SHARES (30%) 1.41

PROVISION FOR TAX ON DISTRIBUTED PROFITS 0.24

BALANCE CARRIED TO NEXT YEAR 0.12

DIVIDEND

Your Directors recommend a Dividend of Rs. 3.00 (30%) per equity share of Rs. 10/- each for the financial year ended 31 March 2010.

PERFORMANCE REVIEW, MANAGEMENT DISCUSSION, ANALYSIS REPORT AND OUTLOOK FOR THE CURRENT YEAR :

GENERAL ECONOMY AND ITS IMPACT ON TEXTILES :

The Indian economy grew by 7.40% in spite of global issues and not so favorable a monsoon.

Exports from the country registered a --3.98% growth, lower growth than the previous year.

Textile exports registered a growth rate of 6.18%

Although the GDP growth rate came down, various factors have made the income at the bottom of the pyramid go up steeply. NREGA,Farm loan write off, higher support prices for agricultural produce have directly improved the income accruing at the bottom of the pyramid. More than this, the indirect benefit of NREGA of raising the minimum wages paid across all low paying sectors mainly farming and textiles has been significant. It is estimated that NREGAs direct and indirect impact would be in excess of Rs. 200,000 crores getting added to the income of the bottom of the pyramid.

This huge additional income will most certainly positively impact textile consumption. One meter increase in per capita consumption will need 10 lac bales of cotton and 18 lac spindles. It is clear that for the next few years the domestic consumption growth in textiles will be robust and textile industry will enjoy a good domestic market. Since the Textile industry is predominantly export oriented, improvements in domestic consumption alone will not be sufficient to keep demand exceeding supply.

Textile exports and government policies : Textile industry in India is very highly export dependent, almost 50% of the factory gate turnover of textiles comes from exports. Textile exports from India suffered heavily during this period due to government policies.

1. Unrestricted flow of foreign currency into India including large in flows through ECBs even after RBI put it on a restricted list together with speculative news of rupee appreciating to very high levels, made rupee appreciate for the wrong reasons. This affected Indian exports as a whole.

2. Government from krishi youjana gave incentives to cotton traders with retrospective effect and government controlled CCI (Cotton corporation of India) gave these large exporters 10% discount in various forms thus making our Indian cotton at least 10% cheaper to our competitors in China, Pakistan and Bangladesh.

3. During the period of global slow down all other textile exporting nations gave upto 100% additional incentives to the labour intense textile industry, our government on the other hand reduced incentives.

4. TUFs loan interest subsidy to an extent of 2000 crores was not disbursed.

However ever since the new Minister took over textiles he has in quick time rectified all those issues in his control and the Rupee which appreciated for the wrong and unsustainable reasons retraced its path. Today the textile industry is back on tracks and the exports are set to grow. The policies on exports are thus favorable for value added exports for the first time and auger well for Indian.

Textles Power Scenario : The power situation in Tamil Nadu where our factories are located continues to be critical. More than the actual shortage, the inequal distribution of the shortage and poor grid maintenance, frequent power tripping is causing huge losses to our company. It is estimated that our company would have suffered an additional loss of Rs 20 crores due to the inequal distribution of shortage and poor grid quality in addition to the normal losses due to genuine power shortage.

Interest rate : The market remained sluggish as the government during most part of the financial year was following wrong policies and encouraging exports from our competitors we were forced to give longer credit, carry much larger finished goods inventory etc, and our borrowings on working capital went up steeply. Fixed investment made was not utilized fully due to non- availability of power. With creeping increase in interest rate, interest costs went up both in absolute terms and in % terms. However, since November of 2009 there is a marked improvement in the all round performance; interest rates are coming down, working capital is also being reduced, uttilisation is improving. It is expected that very soon interest rate as a % of our turnover will come down.

Current working and future prospects : The year under review has been better than the previous year and we have been able to return to profits, the year ahead certainly looks better and we can expect to do much better both in terms of turnover and profits. The policies are favoring value addition which our company is focused on. The levels of in equality in power distribution will certainly come down and board has promised to improve the quality of power. Both domestic market; due to the bottom of the pyramid getting more money and the export markets due to the stoppage of subsidized exports of cotton to our competitors are showing good improvements.

Expansion of capacity: Our new investment in Andhra Pradesh is progressing well and the new state of art spinning with a capacity of 22500 spindles and 100 Air Jet looms will get completed and commissioned by the end of this year.

Industrial relations : The comapany has cordial industrial relations at all its plants, the total employee strength stands at 3100.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

All amounts which are due to be transferred to the Investor Education and Protection Fund are regularly monitored and transferred. During the year, the Company has transferred a sum of Rs. 3.11 Lakhs, being the amount due and payable and remaining unpaid for a period of 7 years, as provided under Section 205C of the Companies Act, 1956 read with the Investor Education and Protection Fund (awareness and protection of investors) Rules, 2001. Members who have not encashed the Dividend warrants for the financial year ended 2002-2003 and / or any subsequent years are requested to write to the Company with necessary details before 12.10.2010.

EXPORTS

During the Year under review, the company exported goods to the tune of Rs. 314.08 crore.

MODERNISATION :

A sum of Rs. 5.94 crore (Previous year Rs. 14.63 crore) was spent on modernization / replacement of plant and machinery during the year under review.

FINANCE :

During the year the Company availed term loans to the tune of Rs. 8.32 crore and repaid loans to the extent of Rs. 9.64 crore to Banks/ Financial institutions.

FIXED DEPOSITS :

4 deposits aggregating to Rs. 2.04 lakhs remained unclaimed as on 31st March 2010. No deposit has since been renewed / repaid.

DIRECTORS :

In accordance with the provisions of the Companies Act, 1956, Mr. S. Venkataramani, Director and Mr. Shridhar Subrahmanyam retires by rotation and are eligible for reappointment.

DIRECTORS RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIES ACT, 1956.

The Directors hereby state :-

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures.

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

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

d) that the directors have got prepared the annual accounts on a going concern basis.COMPANY SECRETARY : During the year under report, Mr. Shiva Prasad Padhy was appointed as Company Secretary with effect from 17th September, 2009.

LISTING :

The Companys equity shares continue to be listed on the Bombay Stock Exchange, Mumbai. The listing fees for the year 2010-2011 has been paid.

AUDITORS :

M/s. Suri & Co., Chartered Accountants, Auditors of the Company retire at this Annual General Meeting and are eligible for reappointment. The Company has received a letter from M/s. Suri & Co to the effect that their appointment as auditors, if made, would be within the limits of Section 224(1-B) of the Companies Act, 1956.

The Auditors Report to the shareholders does not contain any qualifications.

REPORT ON CORPORATE GOVERNANCE

A detailed report on Corporate Governance is annexed to this report. The Company has complied with the conditions of Corporate governance as stipulated in clause 49 of the listing agreement. The certificate obtained from the auditors of the Company regarding compliance of conditions is annexed to this report.

PARTICULARS OF EMPLOYEES :

As required by Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, a statement of information relating to the employees has been given in the Annexure, which forms part of this Report.

PARTICULARS OF ENERGY CONSUMPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required as per Section 217 (1)(e) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 is given in the annexure, which forms part of this report.

ACKNOWLEDGEMENT

Your Directors wish to acknowledge the co-operation and assistance extended by Exim Bank, Central Bank of India, State Bank of India, Karur Vysya Bank Ltd., Indian Bank and State Bank of Mysore. Your Directors appreciate the continued co-operation extended by staff and workers of the company and look forward to the same cordial relationship in the coming years.

For and on behalf of the Board of Directors Place: CHENNAI MANIKAM RAMASWAMI Date : 24 th May, 2010. Chairman & Managing Director

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