Directors Report of Oswal Spinning & Weaving Mills Ltd.

Mar 31, 2014

Dear Members,

The Directors of your Company have pleasure in presenting the 58th Annual Report of the Company together with the Audited Accounts for the year ended 31st March, 2014.

FINANCIAL HIGHLIGHTS (Rs.in lacs)

PARTICULARS YEAR ENDED YEAR ENDED 31.03.2014 31.03.2013 (12 Months) (15 Months)

Net Sales and Income 14593.77 15544.43

Gross Profit 963.54 1948.45

Less:

i) Financial Expenses 512.31 744.37

ii) Depreciation 98.20 504.36

Profit before exceptional items 353.03 699.72

Exceptional items 315.81 0.00

Profit before tax 37.22 699.72

Provision for tax 0.00 0.00

Net Profit 37.22 699.72

PERFORMANCE REVIEW

During the year under report Cotton Spinning Unit of the Company produced 54.58 lacs kgs of Cotton Yarn at an Avg. count of Ne 22.32 as compared to previous year production of 66.59 lacs kgs. at an Avg. count of Ne 23.44. The previous year was of 15 months and year under report is of 12 months. So the production level has slightly improved as compared to previous year. The Company achieved total income of Rs. 14593.77 lacs as compared to 15544.43 lacs during the previous year. Gross profit was Rs. 963.54 lacs against gross profit of Rs. 1948.45 lacs during the previous year. Company''s profit before exceptional items is Rs. 353.03 lacs and net profit after exceptional item is Rs. 37.22 lacs against net profit of Rs. 699.72 lacs during the previous year. The year under report was an adverse year for Cotton Spinning Industry. The main reason was the steep hike in cotton prices during the year under report as compared to previous year. The main cause of high prices of raw cotton was the export of substantial quantities of cotton under OGL. Speculators also played their part in keeping the cotton prices high. There was much volatility in cotton prices. This had serious adverse effect on Cotton Spinning Industry.

On the other hand, yarn prices remained subdued due to sluggish demand in the International market. During the year when China who is a major yarn importer stopped import of Cotton Yarn, the yarn prices further fell. So there was quite mis-match between raw material cost and price realisation of finished goods. All this resulted in adverse financial performance by the company. During the year under report prices of power and fuel and personnel expenses also increased. All these factors resulted in higher cost of production and these led to adverse financial performance by the Company.

EXPORTS

Your Company is producing high quality products conforming to international standards and the Cotton Spinning Unit has been awarded ISO 9001-2008 certification. The Company is supplying yarns in various countries and to some of the most reputed global yarn importers. Because of its exports performance, your Company has been awarded the status of a Star Export House by Government of India.

During the year under report, the Company made an export turnover of Rs.7672.86 lacs as compared to previous year''s export turnover of Rs. 9499.61 lacs. Export Turnover was slightly better as compared to previous year of 15 months.

CURRENT YEAR''S OUTLOOK

Your Company is manufacturing 100% grey cotton yarns for which the raw material is Cotton. Due to introduction of high yielding BT Cotton, raw cotton of different varieties is abundantly available in the country.

Though there was delay in onset of monsoon in the country but subsequently monsoon has been quite active in the cotton crop growing regions in the country. Areas under crop cultivation have increased as compared to previous season. The country is expecting bumper cotton crop during the ensuing season starting from September, 2014.

Due to expectation of bumper cotton crop not only in India but also major cotton growing countries like USA, Pakistan, China etc. the cotton prices have started declining. The Company expects to buy cotton at reasonable cost during the coming season. Demand of cotton yarn is also picking up in the International market. Demand for cotton yarn is also picking up in the the International market. China is also expected to restart import of cotton yarn. All these factors will help in increase in the price of yarn in the International market. Rupee-Dollar exchange rate is stable which is to the advantage of the Company.

Due to these factors the Company expects to show better financial performance during the current year as compared to that of the year under report

DIVIDEND

Your Directors regret their inability to recommend any dividend for the year under report with a view to conserve its resources.

DIRECTORS

Sh. Raj Paul Oswal is retiring by rotation at the ensuing Annual General Meeting and is eligible for reappointment.

Sh. Pawan Kumar Bahl, Sh. Raghubir Chand Singal and Dr. Yash Paul Sachdeva are the independent Directors of the Company. It is proposed to appoint them as independent Directors of the Company for a term of 5 years. They will not retire by rotation.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of the Companies Act your directors confirm that:-

i) in the preparation of the accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) the Directors have selected such accounting policies and applied them consistently and made

judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the profit of the Company for the year ended on that date;

iii) 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) the Directors have prepared the Annual Accounts on a going concern basis.

CORPORATE GOVERNANCE

Your Company is committed to adopt good Corporate practices that will enable it to achieve its goal of creating an organization with increasing employee and customer satisfaction and shareholders value. A separate Report on Corporate Governance is attached as part of the Annual Report pursuant to Clause 49 of the Listing Agreement. The Auditors Certificate is included in the said Corporate Governance Report.

AUDITORS AND THEIR OBSERVATIONS

M/s Dass Khanna & Co., Chartered Accountants, Ludhiana, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Report of the Auditors is self explanatory and also explained in the respective Notes on Accounts and hence does not call for any explanation or clarification by the Board.

COST AUDITOR

The Company has appointed, Sh. Rishi Mohan Bansal as Cost Auditor for the Cotton Spinning Unit of the Company for the year 2014-15, and Central Government has also approved his appointment. PUBLIC DEPOSITS

During the year under report the Company did not invite or accept any Public Deposits within the meaning of Section 58-A of the Companies Act, 1956 and rules made there under.

As on 31st March, 2014, the outstanding deposits amounted to Nil and the overdue unclaimed deposits amounted to Nil.

LISTING

The securities of the Company are listed at Ludhiana, Delhi, Ahmadabad, Mumbai and Calcutta Stock Exchanges. The Company has also applied for delisting of its shares from the stock exchanges at Ludhiana, Delhi, Calcutta and Ahmadabad and our applications are pending. PARTICULARS OF EMPLOYEES

The information as required under the Companies Act read with the Companies (Particulars of Employees) Rules, 1975 as amended is Nil.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS &OUTGO

The information pursuant to the Companies Act read with Rules made thereunder is given in the Annexure I to this Report.

INDUSTRIAL RELATIONS

The industrial relations remained peaceful and cordial throughout the year in the Company. ACKNOWLEDGEMENTS

Your Directors take this opportunity to offer their sincere thanks to various departments of the

Central and State Governments, Banks, Financial Institutions, Mutual Funds and Investors for their unstinted support and assistance. Your Directors also express their deep appreciation for the devoted and sincere services rendered by workers, staff and executives at all levels during the year and we are confident that your Company will continue to receive such co-operation from them in future also

FOR AND ON BEHALF OF THE BOARD

PLACE : LUDHIANA RAJ PAUL OSWAL DATED : 28.08.2014 CHAIRMAN

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Mar 31, 2013

Dear Members,

The Directors of your Company have pleasure in presenting the 57th Annual Report of the Company together with the Audited Accounts for the year ended 31st March, 2013.

FINANCIAL HIGHLIGHTS (Rs.in lacs)

PARTICULARS YEAR ENDED YEAR ENDED 31.03.2013 31.12.2011 (15 Months) (15 Months)

Net Sales and Income 15344.08 14764.53

Gross Profit 1748.10 (-)636.54

Less:

i) Financial Expenses 744.37 1062.79

ii) Depreciation 504.36 514.61

Profit before exceptional items 499.37 (-)2213.94

Exceptional items 200.35 2330.47

Profit before tax 699.72 116.54

Provision for tax 0.00 0.00

Net Profit 99.72 116.54

PERFORMANCE REVIEW

During the year under report, Cotton Spinning Unit of the Company produced 66.59 lac kgs. of cotton yarn as compared, to previous year''s production of 60.55 lac kgs. of cotton yarn, thereby showing an increase of 6.04 lac''kgs. The Company''s operating income was Rs. 15344.08 lacs as against previous year''s income of Rs. 14764.53. which shows an increase of Rs. 579.55 lacs (3.92%). Gross profit of the Company is Rs. 1748.10 lacs as against gross profit/(loss) of Rs. (636.54 lacs) during the previous year. Company''s net profit is Rs. 699.72 lacs as against previous year''s net profit of Rs. 116.54 lacs.

During the year under report the cotton spinning industry performed better than the previous year. During the previous year there was much volatility both in cotton prices as well as yarn prices. Due to this, the industry had suffered losses. But during the year under report, both the prices of cotton and yarn were stable. In fact demand for cotton yarn in global markets remained high and accordingly, the cotton yarn prices also showed some upward trend.

Further, as the rupee remained in depreciating mode against USD during the year under report there was better price realisation.

However power & fuel and personnel expenses increased to some extent. In spite of the increase in these expenses the Company showed better performance during the year under report as compared to the previous year.

EXPORTS

Your Company is producing high quality products conforming to international standards and the Cotton Spinning Unit has been awarded ISO 9001-2008 certification. The Company is supplying yarns in various countries and to some of the most reputed global yarn importers. Because of its exports performance, your Company has been awarded the status of a Star Export House by Government of India.

During the year under report, the Company made an export turnover of Rs.9499.61 lacs as compared to previous year''s export turnover of Rs. 9399.90 lacs. So, there was a slight improvement in Company''s export turnover.

CURRENT YEAR''S OUTLOOK

Your Company is manufacturing 100% grey cotton yarns for which the raw material is Cotton. Due to introduction of high yielding BT Cotton, raw cotton of different varieties is abundantly available in the country.

So far the monsoon has been very good in the cotton growing regions in the country and areas under cotton cultivation have increased as compared to the previous season. The country is expecting bumper cotton crop during the coming season starting from September, 2013.

Therefore, the Company will be able to buy cotton at reasonable cost. Further, there is ample demand for cotton yarn in global markets and the prices are also good. As the rupee is depreciating against USD in the last six months, the Company will be able to achieve better sale realisation during the coming months.

Due to these factors the Company expects to show better financial performance during the current year as compared to that of the year under report.

DIVIDEND

Your Directors regret their inability to recommend any dividend for the year under report with a view to conserve its resources.

FINANCIAL YEAR

The financial year of the Company under Report was 15 months i.e. from 01.01.2012 to 31.03.2013.

DIRECTORS

Sh. Raj Paul Oswal and Sh. Sambhav Oswal retires by rotation at the ensuing Annual General Meeting and are eligible for reappointment.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of the Companies Act 1956, your directors confirm that:-

i) in the preparation of the accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31ST March, 2013 and of the profit of the Company for the year ended on that date;

iii) 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) the Directors have prepared the Annual Accounts on a going concern basis.

CORPORATE GOVERNANCE

Your Company is committed to adopt good Corporate practices that will enable it to achieve its goal of creating an organization with increasing employee and customer satisfaction and shareholders value. A separate Report on Corporate Governance is attached as part of the Annual Report pursuant to Clause 49 of the Listing Agreement. The Auditors Certificate is included in the said Corporate Governance Report.

AUDITORS AND THEIR OBSERVATIONS

M/s Dass Khanna & Co., Chartered Accountants, Ludhiana, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Report of the Auditors is self explanatory and also explained in the respective Notes on Accounts and hence does not call for any explanation or clarification by the Board. However, clarifications to some of the points raised by the Auditors are as under- Regarding depreciation provided in the Cotton Spinning Unit on continuous process basis, the matter is already explained in Note No. F.

COST AUDITOR

The Company has appointed, Sh. Rishi Mohan Bansal as Cost Auditor for the Cotton Spinning Unit of the Company for the year 2013-14, and Central Government has also approved his appointment.

PUBLIC DEPOSITS

During the year under report the Company did not invite or accept any Public Deposits within the meaning of Section 58-A of the Companies Act, 1956 and rules made there under.

As on 31st March, 2013, the outstanding deposits amounted to Nil and the overdue unclaimed deposits amounted to Nil.

LISTING

The securities of the Company are listed at Ludhiana, Delhi, Ahmadabad, Mumbai and Calcutta Stock Exchanges. The Company has also applied for delisting of its shares from the stock exchanges at Ludhiana, Delhi, Calcutta and Ahmadabad and our applications are pending.

PARTICULARS OF EMPLOYEES

The information as required under section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended is Nil.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The information pursuant to section 217 (1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in the Annexure I to this Report.

INDUSTRIAL RELATIONS

The industrial relations remained peaceful and cordial throughout the year in the Company.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to offer their sincere thanks to various departments of the Central and State Governments, Banks, Financial Institutions. Mutual Funds and Investors for their unstinted support and assistance. Your Directors also express their deep appreciation for the devoted and sincere services rendered by workers, staff and executives at all levels during the year and we are confident that your Company will continue to receive such co-operation from them in future also.

FOR AND ON BEHALF OF THE BOARD

PLACE: LUDHIANA RAJ PAUL OSWAL

DATED: 12.08.2013 CHAIRMAN

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Dec 31, 2011

The Directors of your Company have pleasure in presenting the 56th Annual Report of the Company together with the Audited Accounts for the year ended 31 st December, 2011.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

PARTICULARS YEAR ENDED 31.12.2011 YEAR ENDED 30.09.2010 (15 Months) (15 Months)

Net Sales and Income 17095.01 11850.64

Gross Profit 1693.96 1569.15 Less :

i) Financial Expenses 1062.80 952.01

ii) Depreciation 514.62 518.50

iii) Provisions for Fringe Benefit Tax 0 0 Net Profit 116.54 98.64 Adjustments Relating to Previous Years 0 (-)0.22 Balance brought forward from earlier years (-)1498.41 (-) 1761.82 Tfd. from Debentures Redemption Reserve 0 165 00 Balance carried over to Balance Sheet (-)1381.88 (-)1498.40

PERFORMANCE REVIEW

During the year under report, Cotton Spinning Unit of the company produced 60.55 lac kgs. of cotton yarn as compared to previous year's production of 69 66 lac kgs. of cotton yarn. The decline in production is mainly on account of the fact that the company had to slow down its production for 2-3 months due to accumulation of stock consequent to Govt 's restrictions on export of cotton yarn The Company achieved net income of Rs.17095.01 lacs as compared to Rs. 11850.64 lacs in the previous year. Gross profit was Rs. 1693.96 lacs as compared to Rs. 1569.15 lacs during the previous year. The Company earned net profit of Rs.116.54 lacs as compared to net profit of Rs. 98.64 lacs during the previous year.

The year under report was very challenging for the cotton spinning industry. The Central Govt, put a cap on export of cotton yarn and also imposed restrictions on the same. Consequent to this there was almost no export of cotton yarn for 2-3 months. This resulted in piling up of inventory both of cotton yarn and raw cotton. The overseas buyers had no choice but to shift to other countries to source their requirement of cotton yarn Ultimately when the export restriction was lifted the prices of both cotton yarn and raw cotton dropped drastically in the overseas market which resulted in diminishing of value of raw cotton and yarn. This resulted in losses to the cotton spinning industry. Further various exports incentives like duty drawback DEPB Scheme, Interest Subvention etc. were withdrawn. Later on Duty Drawback was restarted but its rate was reduced from 4% to 2.9%. Your company being export oriented was hit by the withdrawal of these incentives. Increase in interest rates also affected the profits of the Company. However, the adverse effect of all these factors was, to some extent, offset by decrease in prices of cotton and depreciation of Rupee against USD.

EXPORTS

Your company is producing high quality products conforming to international standards and the Cotton Spinning Unit has been awarded ISO 9001-2000 certification. The Company is supplying yarns in various countries and to some of the most reputed global yarn importers. Because of its exports performance, your company has been awarded the status of a Star Export House by Government of India.

During the year under report, the Company made an export turnover of Rs.9500.11 lacs as compared to previous year's export turnover of Rs 8653 08 lacs. So, there was a significant improvement in company's export turnover as compared to that of the previous year

CURRENT YEAR'S OUTLOOK

Your company is manufacturing 100% grey cotton yarns for which raw material is cotton. Due to introduction of high yielding BT Cotton, raw cotton of different varieties is abundantly available in the country During the current cotton season, there is abundant supply of cotton and prices are lower as compared to previous year But due to slowdown in Eurozone, demand for cotton yarn is sluggish and prices are also declining But due to the depreciation of Rupee against USD, the Company is able to achieve better sales realisation in rupees terms in spite of declining yarn prices. The Company expects this situation to continue in the near future also.

There is expectation of good cotton crop world wide during the next cotton season, so the prices of cotton are also expected to remain stable at the present level If this trend continues, the Company expects to show better financial performance during the current year as compared to the year under Report.

PROPOSED EXPANSION PROJECT

At present the Cotton Spinning Unit of the Company has 26208 spindles The Company proposes to expand Capacity of the Unit by adding another 12960 spindles Your Board of Directors is working out the details of the project We shall keep the Shareholders informed of further developments in this regard

DIVIDEND

Your Directors regret their inability to recommend any dividend for the year under report with a view to conserve its resources

FINANCIAL YEAR

The financial year of the Company under Report was extended from 12 months to 15 months i.e. from 01 10.2010 to 31 12 2011 -

CHANGE OF SITUATION OF THE REGISTERED OFFICE OF THE COMPANY

The Company has changed the situation of the Registered Office of the Company from G.T. Road, Jugiana, Ludhiana to No 11 & 12, 1st Floor; Block-F, Main Market Near Orient Cinema, B R.S. Nagar, Ludhiana- 141012, wef 18.04.2012.

DIRECTORS

The tenure of Sh A.K. Oswal, Managing Director ended on 30 04 2012 The Board of Directors has reappointed Sh A.K. Oswal as Managing Director for another five years w e f 1st May, 2012 subject to the approval of shareholders Sh Raghubir Chand Singal retires by rotation at the ensuing Annual General Meeting and is eligible for reappointment

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of the Companies Act 1956, your directors confirm that

i) in the preparation of the accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures, if any;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st December, 2011 and of the profit of the Company for the year ended on that date;

iii) 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) the Directors have prepared the Annual Accounts on a going concern basis.

CORPORATE GOVERNANCE

Your Company is committed to adopt good Corporate practices that will enable it to achieve its goal of creating an organization with increasing employee and customer satisfaction and shareholders value. A separate Report on Corporate Governance is attached as part of the Annual Report pursuant to Clause 49 of the Listing Agreement. The Auditors Certificate is included in the said Corporate Governance Report.

AUDITORS AND THEIR OBSERVATIONS

M/s Dass Khanna & Co., Chartered Accountants, Ludhiana. Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Report of the Auditors is self explanatory and also explained in the respective Notes on Accounts and hence does not call for any explanation or clarification by the Board However, clarifications to some of the points raised by the Auditors are as under -

Regarding depreciation provided in the Cotton Spinning Unit on continuous process basis, the matter is already explained in Note No 8 Regarding non provision in respect of debtors not considered good, the same has not been provided as the Company is making efforts to recover the amount of debt from them

COST AUDITOR

The Company has appointed, subject to the approval of the Central Govt. Sh Rishi Mohan Bansal as Cost Auditor for the Cotton Spinning Unit of the Company for the year 2012-2013

PUBLIC DEPOSITS

As on 31th December, 2011, the outstanding deposits amounted to Nil and the overdue unclaimed deposits amounted to Nil.

LISTING

The securities of the Company are listed at the Ludhiana, Delhi, Ahmadabad. Mumbai and Calcutta Stock Exchanges The Company has also applied for delisting of its shares from the stock exchanges at Ludhiana Delhi Calcutta and Ahmadabad and our applications are pending

PARTICULARS OF EMPLOYEES

The information as required under section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended is Nil

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The information pursuant to section 217 (1 )(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in the Annexure I to this Report.

INDUSTRIAL RELATIONS

The industrial relations remained peaceful and cordial throughout the year in the Company

ACKNOWLEDGEMENTS

Your Directors take this opportunity to offer their sincere thanks to various departments of the Central and State Governments, Banks. Financial Institutions. Mutual Funds and Investors for their unstinted support and assistance Your Directors also express their deep appreciation for the devoted and sincere services rendered by workers, staff and executives at all levels during the year and we are confident that your Company will continue to receive such co-operation from them in future also

FOR AND ON BEHALF OF THE BOARD

PLACE ; LUDHIANA RAJ PAUL OSWAL

DATED : 24.05.2012 (CHAIRMAN)

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Sep 30, 2010

The Directors of your Company have pleasure in presenting the 55th Annual Report of the Company together with the Audited Accounts for the year ended 30th September, 2010.

FINANCIAL HIGHLIGHTS (Rs.in lacs)

PARTICULARS YEAR ENDED YEAR ENDED 30.09.2010 30.06.2009 (15 Months) (12 Months)

Net Sales & Other Income 11850.64 8211.76

Gross Profit 1569.15 1315.82

Less:

(i) Financial Expenses 952.01 747.66

(ii) Depreciation 518.50 407.47

iii) Provisions for Fringe Benefit Tax 0 3.70

Net Profit 98.64 156.99

Adjustments Relating to Previous Years (-) 0.22 (-) 0.09

Balance brought forward from earlier years (-) 1761.82 (-) 1918.71

Tfd. from Debentures Redemption Reserve 165.00 0

Balance carried over to Balance Sheet (-) 1498.40 (-) 1761.82

Dividend

Your Directors regret their inability to recommend any dividend for the year under report with a view to conserve its resources.

FINANCIAL YEAR

The financial year of the Company under Report was extended from 12 months to 15 months i.e. from 01.07.2009 to 30.09.2010.

DIRECTORS

During the year under report, Dr. Yash Paul Sachdeva was appointed as Additional Director by the Board on 25.02.2010 and he holds office till the ensuing Annual General Meeting. The Company has received a notice from a member proposing his appointment as a Director liable to retire by rotation in the ensuing Annual General Meeting. Sh. Pawan Kumar Bahl retires by rotation at the ensuing Annual General Meeting and is eligible for reappointment.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of the Companies Act 1956, your directors confirm that:-

i) in the preparation of the accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures, if any;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 30th September, 2010 and of the profit of the Company for the year ended on that date;

iii) 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) the Directors have prepared the Annual Accounts on a going concern basis.

CORPORATE GOVERNANCE

Your Company is committed to adopt good Corporate practices that will enable it to achieve its goal of creating an organization with increasing employee and customer satisfaction and shareholders value. A separate Report on Corporate Governance is attached as part of the Annual Report pursuant to Clause 49 of the Listing Agreement. The Auditors Certificate is included in the said Corporate Governance Report.

AUDITORS AND THEIR OBSERVATIONS

M/s Dass Khanna & Co., Chartered Accountants, Ludhiana, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. The Report of the Auditors is self explanatory and also explained in the respective Notes on Accounts and hence does not call for any explanation or clarification by the Board. However. clarifications to some of the points raised by the Auditors are as under-Regarding depreciation provided in the Cotton Spinning Unit on continuous process basis, the matter is already explained in Note No. 10. Regarding non provision in respect of debtors not considered good, the same has not been provided as the Company is making efforts to recover the amount of debt from them.

COST AUDITORS

The Company has appointed, subject to the approval of the Central Govt., Sh. Rishi Mohan Bansal as Cost Auditor for the Cotton Spinning Unit of the Company for the year 2010-2011.

PUBLIC DEPOSITS

As on 30th September, 2010, the outstanding deposits amounted to Nil and the overdue unclaimed deposits amounted to Nil.

LISTING

The securities of the Company are listed at the Ludhiana, Delhi, Ahmadabad, Mumbai and Calcutta Stock Exchanges. The Company has also applied for delisting of its shares from the stock exchanges at Ludhiana, Delhi, Calcutta and Ahmadabad and our applications are pending.

PARTICULARS OF EMPLOYEES

The information as required under section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended is Nil.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The information pursuant to section 217 (1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in the Annexure I to this Report.

INDUSTRIAL RELATIONS

The industrial relations remained peaceful and cordial throughout the year in the Company.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to offer their sincere thanks to various departments of the Central and State Governments, Banks, Financial Institutions, Mutual Funds and Investors for their unstilted support and assistance. Your Directors also express their deep appreciation for the devoted and sincere services rendered by workers, staff and executives at all levels during the year and we are confident that your Company will continue to receive such co-operation from them in future also.



FOR AND ON BEHALF OF THE BOARD

PLACE: LUDHIANA R.P. OSWAL

DATED: 24.02.2011 CHAIRMAN