Directors Report of Priyadarsini Ltd.

Mar 31, 2014

Dear Members,

The Directors of your Company have pleasure in presenting the 33rd Annual Report together with the audited statement of accounts for the 9 Months ending 31st March, 2014.

FINALCIAL RESULTS (Rs. In Lakhs)

Current year previous year (9 months) (15 Months)

Ended Ended 31.03.2014. 30-06-2013

1.Sales and other Income 3619.13 11873.65

2.Profit before interest and depreciation 376.78 935.75

3.Interest and Finance Charges 435.12 1081.09

4.Depreciation 354.87 754.62

5.Profit/(loss) after interest and Depreciation (1166.78) (2773.80)

6.Provision for Taxation

a) Current Tax - -

b) Fringe Benefit Tax - - c) Deferred Tax charge 00 0

7.Prior period item - -

8.Net Profit (loss) Aftertax (1166.78) (1100.00) 9.Profit and Loss A/c Balance (4870.43) (3873.80)

10.Reserves 1466.13

APPROPRIATIONS

1.Surplus carried forward to Balance Sheet (6037.21) (4870.43)

REVIEW OF OPERATIONS:

During the 9 months period under review, the company has achieved a turnover of Rs. 3619.13 lakhs against Rs.11876.80 in the previous 15 months period and it is not comparable due to different period. The company has incurred a loss of Rs. 1166.78 Lakhs against a loss of Rs. 2401.36 Lakhs in the previous period.

Due to lack of working capital the company carried out the operations on job work basis during the entire period under review.

The Management is taking effective steps to cut the cost and improve production.

TEXTILE INDUSTRY

A textile is the oldest industry in the country and it is the most labor intensive industry. This sector gives direct employment to 35 million people and indirect employment to 45 million people covering mostly women and rural poor. This industry contributes for the growth of the country in terms of job creation in rural areas, export earnings, besides meeting the basic needs of the people.

The capacity of the Industry is much more than the domestic requirements. The fall in exports due to recession in developed countries has resulted in poor price realization from the domestic market. The unprecedented huge price fluctuations of raw materials and demand recession for all Textile products have seriously affected and drove the industry to register huge losses during the year Nearly 75% to 80% of the textile mills across the country have started incurring losses.

In order to bail out the ailing industry the Spinning Mills Associations have approached the Textile Ministry pleading for reliefs. Recently the Government has agreed to provide some relief which includes: Debt Restructuring for Rs.35, 000 Crores. RBI to relax conditions to avoid Textile units being classified as NPAS by opt for debt restructuring. Moratorium on payment of principal and interest on term loans for a period of two years. Sanction of working capital term loan representing the uncovered portion in the cash credit loan account and Interest relief.

With the reliefs that are going to be available from the Banks, now the industry is hoping to turn around.

OUTLOOK ON OPPORTUNITIES, RISK AND CONCERN:

The fundamental growth drivers of Indian economy remain strong despite the economic turmoil in the world. There would be growing opportunities in the international market as well as domestic market. The consumption is growing in response to growing per capita income, population and strong retail push. With regards to textile industry, there are significant opportunities in the domestic market as more consumers are buying readymade garments and also consumption of the cloth per capita continues to increase due to growth in the economy which is adding to the purchasing power of the Consumers.

Macroeconomic factors increase in interest rates are the major risk factors presently for the textile industry. Increase in interest rates will affect the profitability. Since the industry is capital intensive.

ADEQUACY OF INTERNAL CONTROLS

The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded, and protected against loss from unauthorized use of disposition, and that transactions are authorized, recorded, and reported correctly. The internal control system is supplemented by an extensive program of internal audits, review by management and documented policies, guidelines and procedures.

The internal control system is designed to ensure that the financial and other records enable for preparing financial statements and other data and for maintaining accountability of assets. The audit Committee comprising independent Directors will review the internal control system on quarterly basis.

EXPORTS:

During the period under review there were no exports

WIND MILL:

During the year under review, the 1.8 M.W Wind power Mill has generated 1605427 units as against 3171776 units in the previous year.

GAS POWER PROJECT

The 3.2 M.W. Gas based power project of the Company has not generated power during the current year due to non-availability of Gas.

FIXED DEPOSITS:

The fixed Deposits outstanding as on 30.06.2014 amounted to Rs 282.62 Lakhs. The outstanding fixed deposits will be re-paid as per the provisions in the companies Act, 2013.

INSURANCE:

The properties of the Company including its building, plant and machinery and stocks as required have been adequately insured.

CORPORATE GOVERNANCE:

The Company is in conformity with the code of Corporate Governance enunciated in clause 49 of the Listing agreement with Stock Exchanges. A separate report on Corporate Governance is annexed hereto and form part of Directors Report together with a certificate from the Auditors of the Company confirming compliance of the Conditions of Corporate Governance.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to section 134(5) of the Companies Act,2013, your Director''s Confirm that:

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

ii) Such accounting policies have been selected 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 statement of affairs of the Company at the end of the financial year and of the profit of the Company for that year

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

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

v) The directors incase of listed company had laid down internal financial control to be followed by the company and that such internal financial controls are adequate and were operating effectively.

vi) The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DIRECTORS:

1. Mr. D.Sivayya, appointed as a director on the Board w.e.f.17.10.2013

2 Mr. V,B.Bajaj appointed as Additional Director w.e.f.06th April, 2014

3.Mr. Govardhana Naidu, Additional Director resigned from the office of the company 14.02.2014

4.Exim bank withdrawn Mr.David L Sinate, as nominee director on the board of Directors of the company.W.e.f.14.02.2014

All the Independent Directors are appointing for a period of 5 year at the AGM and also proposed to appoint Mr. Kowsalendra Rao Chrukuri as executive vice chairman for a further period of 3 year at the AGM.

STATUTORY AUDITORS:

M/S.P.Srinivasan & Co., Chartered Accountants, theStatutory Auditors of the Company retire at the Conclusion of the ensuing Annual General Meeting and are eligible for re appointment. As per the provisions of companies Act, 2013 they are proposed to be appointed as auditors for a period of 3 years(subject to ratification by the company at every AGM)

CONSERVATION OF ENERGY:

Conservation of energy, Technology Absorption & Foreign exchange and outgo earnings and information pursuant to Section217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are annexed hereto and form part of this report.

PARTICULARSOFEMPLOYEES:

In terms of sub section (2A) of section 217 of the Companies Act, 1956 read with the Companies(Particulars of Employees) Rules 1975 as amended,the Company has No employee drawing salary exceeding Rs. 24.00 Lakhs per annum or Rs.2.00 Lakhs per month during the year under review.

HUMAN RELATIONS:

During the period under review the industrial relations continued to be cordial at all the units.

REFERENCE TO BIFR:

As required under the Sick industrial companies(special provisions) Act 1985 has made a referenceto BIFR under Section 15(1) of SICA. The same is under process for registration.

ACKNOWLEDGEMENT:

Your Directors take this opportunity to offer their sincere thanks for continued assistance and cooperation extended to the Company by various departments of the Central and State Governments,Government Agencies, Financial Institutions, Banks,and other statutory authorities.

Your Directors also take this opportunity to offer their sincere thanks to shareholders, customers, creditors and other related organizations, for their continued support and Cooperation that have helped in the Company''s growth.

Your Directors also wish to thank the employees at all levels for the cooperation extended by them in achieving the results.

For and on behalf of the Board of Directors

Place:Hyderabad C.K.Rao D.VenkataRatnam Date:12.08.2014 Executive Vice chairman Director

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Jun 30, 2013

To the Members,

The Directors of your Company present the 32nd Annual Report together with the audited statement of accounts for the 15 Months ending 30th June, 2013.

FINALCIAL RESULTS (Rs. In Lakhs)

Current year previous year Ended 30.06.2013 Ended 31-03-2012

1. Sales and other Income 11873.65 18974.13

2. Profit before interest and depreciation 938.09 (2141.55)

3. Interest and Finance Charges 1081.09 1728.76

4. Depreciation 754.62 793.54

5. Profit/(loss) after interest and Depreciation (2773.80) (4663.85)

6. Provision for Taxation

a) Current Tax

b) Fringe Benefit Tax

c) Deferred Tax charge 1100 369.29

7. Prior period item

8. Net Profit(loss) After tax (3873.80) (4294.56)

9. Profit and Loss A/c Balance (6336.56) (2462.76)

APPROPRIATIONS

1. Surplus/(deficit)carried forward to Balance Sheet (6336.56) (2462.76)

REVIEW OF OPERATIONS :

During the year under review, the company has achieved a turnover of Rs. 11873.65 lakhs against Rs.18974.13 in the previous year. Thus registering a negative growth of 37.42%. The company has incurred a loss of Rs. 3873.80 Lakhs against a loss of Rs. 4294.56 Lakhs in the previous year.

The poor operative results are due to down trend in the Textile Industry from the beginning of the operative financial year which is mainly on the account of volatility in the cotton market, severe power cut, low production and un-remunerative sale prices. The operations of the company could not meet the interest cost.

The Management is taking effective steps to cut the cost and improve production. The bankers have also been approached for restructuring the limit coupled with reduction in the rate of interest.

TEXTILE INDUSTRY

Textiles is the oldest industry in the country and it is themost labour intensive industry. This sector gives direct employment to 35 million people and indirect employment to 45 million people covering mostly women and rural poor. This industry contributes for the growth of the country in terms of job creation in rural areas, export earnings, besides meeting the basic needs of the people.

The capacity of the Industry is much more than the domestic requirements. The fall in exports due to recession in developed countries has resulted in poor price realization from the domestic market. The unprecedented huge price fluctuations of raw materials and demand recession for all Textile products have seriously affected and drove the industry to register huge losses during the year.

In order to bail out the ailing industry the Spinning Mills Associations have approached the Textile Ministry pleading for reliefs. Recently the Government has agreed to provide some relief which includes :Debt Restructuring for Rs.35,000 Crores.RBI to relax conditions to avoid Textile units being classified as NPAS while opt for debt restructuring.Moratorium on payment of principal and interest on term loans for a period of two years.Sanction of working capital term loan representing the uncovered portion in the cash credit loan account and Interest relief.

OUTLOOK ON OPPORTUNITIES, RISK AND CONCERN:

The fundamental growth drivers of Indian economy remain strong despite the economic turmoil in the world. There would be growing opportunities in the international market as well as domestic market. The consumption is growing in response to growing per capita income, population and strong retail push. With regards to textile industry, there are significant opportunities in the domestic market as more consumers are buying readymade garments and also consumption of the cloth per capita continues to increase due to growth in the economy which is adding to the purchasing power of the Consumers.

Macroeconomic factors increase in interest rates are the major risk factors presently for the textile industry. Increase in interest rates will affect the profitability, since the industry is capital intensive.

ADEQUACY OF INTERNAL CONTROLS

The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded, and protected against loss from unauthorized use of disposition, and that transactions are authorized, recorded, and reported correctly. The internal control system is supplemented by an extensive programme of internal audits, review by management and documented policies, guidelines and procedures.

The internal control system is designed to ensure that the financial and other records are liable for preparing financial statements and other data and for maintaining accountability of assets. The audit Committee comprising independent Directors will review the internal control system on quarterly basis.

EXPORTS:

On the export front, your Company''s export turnover of Rs.1081.02 lakhs during the year 2012-2013 for 15 months as Compared to Rs.1572.83 Lakhs in the previous year for 12 months thereby registering a decline of 29.42%.

WIND MILL:

During the year under review, the 1.8 M.W Wind power Mill has generated 3171776 units as against 2167219 units in the previous year.

GAS POWER PROJECT

The 3.2 M.W. Gas based power project of the Company has not generated power during the current year due to non-availability of Gas.

FIXED DEPOSITS:

The fixed Deposits outstanding as on 30.06.2013 amounted to Rs 362.15 Lakhs

INSURANCE:

The properties of the Company including its building, plant and machinery and stocks as required have been adequately insured.

CORPORATE GOVERNANCE:

The Company is in conformity with the code of Corporate Governance enunciated in clause 49 of the Listing agreement with Stock Exchanges. A separate report on Corporate Governance is annexed hereto and form part of Directors'' Report together with a certificate from the Auditors of the Company confirming compliance of the Conditions of Corporate Governance.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to section 217(2AA) of the Companies Act, 1956, your Director''s Confirm that:

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

ii) Such accounting policies have been selected 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 statement of affairs of the Company at the end of the financial year and of the profit of the Company for that year

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

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

DIRECTORS:

As per the provisions of the Companies Act, 1956 and Article of Association of the Company, two of your Directors Mr.K.Rama Mohana Rao and Mr.D.Venkata Ratnam, retire by rotation and being eligible offer themselves for re – appointment.

STATUTORY AUDITORS:

M/S.P.Srinivasan & Co., Chartered Accountants, the Statutory Auditors of the Company retire at the Conclusion of the ensuing Annual General Meeting and are eligible for re – appointment.

CONSERVATION OF ENERGY:

Conservation of energy, Technology Absorption & Foreign exchange earnings and outgo and information pursuant to Section217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are annexed hereto and form part of this report.

PARTICULARS OF EMPLOYEES:

In terms of sub – section (2A) of section 217 of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975 as amended, the Company has no employee drawing salary exceeding Rs. 24.00 Lakhs per annum or Rs.2.00 Lakhs per month during the year under review.

HUMAN RELATIONS:

During the period under review the industrial relations continued to be cordial at all the units.

ACKNOWLEDGEMENT:

Your Directors take this opportunity to offer their sincere thanks for continued assistance and cooperation extended to the Company by various departments of the Central and State Governments, Government Agencies, Financial Institutions, Banks, and other statutory authorities.

Your Directors also take this opportunity to offer their sincere thanks to shareholders, customers, creditors and other related organizations, for their continued support and Cooperation.

Your Directors also wish to thank the employees at all levels for the co–operation extended by them.

For and on behalf of the Board of Directors

Place: Hyderabad C.K.Rao D.Venkata Ratnam

Date: 26.08.2013 Executive Vice chairman Director

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Mar 31, 2011

To the members,

The Directors of your Company have pleasure in presenting the 30th Annual Report together with the audited statement of accounts for the year ended March 31st, 2011.

FINANCIAL RESULTS (Rs. in Lakhs)

Current year Previous year ended 31-03-2011 ended 31-03-2010

1. Sales and other Income 26109.33 19263.78

2. Profit before interest and depreciation 2254.97 1405.00

3. Interest and Finance Charges 1368.03 1344.94

4. Depreciation 806.59 846.16

5. Profit after interest and Depreciation (80.35) (786.09)

6. Provision for Taxation

a) Current Tax (15.01) -

b) Fringe Benefit Tax - -

c) Deferred Tax/(Asset) 807.89 (787.13)

7. Prior period item - -

8. Net Profit After tax 873.22 1.04

9. Profit brought forward from previous year 958.56 957.53

10. Profit and Loss A/c Balance 1831.79 958.57

APPROPRIATIONS

1. Surplus carried forward to Balance Sheet 1831.79 958.57

REVIEW OF OPERATIONS:

During the year under review, company has achieved a turnover of Rs. 26109.33 lakhs as against Rs.19263.78 lakhs in the previous year, registering a growth of 35.53%.earned a profit of Rs.83 lakh as against the profit of Rs. 1.00 lakhs in the previous year. Though there was increase in turnover it was not reflected in the profitability on account of the increase in the cost of raw materials Cotton and Polyster from the Second half of the year not compensating increase in sale price has pulled down the margin. But for the external factors the operating results could have been better.

The textile industry entered demand contraction in the Month of April 2011 and normalcy is yet to be restored. The impact of this has affected the cotton yarn division at Ongole more. The Ongole Unit was incurring losses from the second half of the year. The company proposes to sell off the Ongole Unit and pre pay loans thus reducing the interest cost and repayment commitment to improve the cash flows and invest in the working capital to improve the operational efficiency and cost reduction.

The company proposed a Corporate Debt Restructuring to the bankers seeking certain concessions with promoters contribution and sale of the Ongole Unit and Gas Turbine. The same is under discussion stage, all these efforts shall yield to have better performance in the next financial year.

TEXTILE INDUSTRY:

Textiles and clothing constitutes the largest manufacturing industry in the country accounting for 4 per cent of GDP, 14 per cent of industrial production and around 12 per cent of the country's total exports. The industry directly provides employment to 35 million workers and provides indirect employment to another 47 million workers. 2010-11 was a good year for the sector in terms of turnover, sales, profit and growth in investments.

The spinning sector has invested over Rs. 40,000 crore in modernization and capacity expansion and its current installed capacity has risen from 38 million spindles in 2001 to 45 million spindles in 2011,i.e., within a 10 year period. The government has been encouraging yarn exports and the domestic consumers never had short supply of yarn. Almost all the global leading players in textiles and clothing manufacturing in countries like European Union, USA, far-east countries including Japan, Bangladesh, have been depending on Indian cotton yarn over decades.

When the cotton prices became highly volatile and speculative during the last year, the yarn price increased steeply though it never matched the abnormal increase in cotton price.Because of persistent demand of value added segments, the government fixed a cap of 720 million kg for exports during the year 2010-11 as against industry demand for 1100 million kg, brought controls on yarn exports and suspended exports for almost three months (Jan-Mar. 2011). In the process, the Indian spinners lost their credibility in the international market as a reliable supplier and lost very valuable customers with whom they had over two decades of business relationship. In addition, the government also withdrew all export benefits including the DEPB/DBK.

The demand for cotton yarn domestically declined substantially and the closure of nearly 1000 dyeing units in Tamil Nadu due to pollution issue (by the High Court) added fuel to the situation. All this resulted in accumulation of stock with Spinning Mills. As on 31st March 2011, the closing stock exceeded 300 million kgs and by May it exceeded 500 million kgs due to sudden glut in the international and domestic markets.

THE IMPACT OF COTTON POLICY

During the year 2010-11, the world witnessed a global shortage of cotton as it was assessed by International Cotton Advisory Committee (ICAC) that the crop of raw cotton will be lower by 10%. The international prices of cotton increased from US $ 0.84 per pound in October, 2010 to a record level of US $ 2.30 per pound in April, 2011, within a period of 6 months, which was unprecedented and a record price in cotton history. The cotton price in India moved in tandem with the world market and also increased from Rs.35,000/- per candy to Rs. 62,500/- per candy during the same period. The premature announcement of cotton exports and lower stock use ratio made cotton prices highly volatile.

OUTLOOK ON OPPORTUNITIES RISK AND CONCERN

The Fundamental growth drivers of Indian Economy remain strong despite the economic turmoil in the world. There would be growing opportunities in the international market as well as domestic market. The consumption is growing in response to growing per capita income, population and strong retail push. With regards to textile industry, there are significant opportunities in the domestic market as more consumers are buying readymade garments and also consumption of the cloth per capita continues to increase due to growth in the economy which is adding to the purchasing power of the Consumers.

Macro economic factors including rupee appreciation increase in interest rates are the major risk factors presently for the textile industry. If there is an appreciation of rupee, then the competitiveness of industry vs. other countries will decrease. Since the products would be diverted to the domestic market, the price realization will decrease even though there is growth in the domestic consumption. Increase in interest rates will affect the profitability. Since the industry is capital intensive.

ADEQUACY OF INTERNAL CONTROLS:

The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded, and protected against loss from unauthorized use of disposition, and that transactions are authorized, recorded, and reported correctly. The internal control system is supplemented by an extensive programme of internal audits, review by management and documented policies, guidelines and procedures.

The internal control system is designed to ensure that the financial and other records are liable for preparing financial statements and other data and for maintaining accountability of assets. The audit Committee comprising independent Directors will review the internal control system on quarterly basis.

EXPORTS:

On the export front, your Company's exports has shown impressive performance by achieving export turnover of Rs. 2669 lakhs during the year 2010- 2011 as Compared to Rs.2192.51 Lakhs in the previous year thereby registering a growth of 21.73%. The Company expects further growth in the exports in the fiscal year 2011-2012.

WIND MILL:

During the year under review, the 1.8 M.W Wind power Mill has generated 20,50,800 units as against 24, 45,482 units in the previous year.

GAS POWER PROJECT:

The 3 .M.W. Gas based power project of the Company has not generated power due to non- availability of Gas

During the year under review, 3MW Gas based Power Plant was not in operation.

The company proposes to sell this unit during the current year 2011-2012 and the proceeds will be utilized for the purpose strengthening working capital. The required NOC from Bankers is in place. There is no debt outstanding on this asset.

GARMENT DIVISION:

During the year the company disposed off its loss making Garment Division after obtaining approval of Lenders and Share holders. The transaction was concluded during 2011 -2012 and the term loan was pre-paid to the extent Rs. 817.20 Lacs. Any loss or profit on the sale of Garment Division will be accounted in the year of conclusion of the transaction.

ONGOLE UNIT :

Your Company proposes to sell off the loss making Ongole Unit manufacturing cotton yarn subject to obtaining approvals from share holders banks and lenders, to restructure its debts.

FIXED DEPOSITS:

The fixed Deposits outstanding as on 31.03.2011 amounted to Rs. 761.26 Lakhs and there were no overdue Deposits.

INSURANCE:

The properties of the Company including its building, plant and machinery and stocks as required have been adequately insured.

CORPORATE GOVERNANCE:

The Company is in conformity with the code of Corporate Governance enunciated in clause 49 of the Listing agreement with Stock Exchanges. A separate report on Corporate Governance is annexed hereto and form part of Directors' Report together with a certificate from the Auditors of the Company confirming compliance of the Conditions of Corporate Governance.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to section 217(2AA) of the Companies Act, 1956, your Director's Confirm that:

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

ii) Such accounting policies have been selected 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 that year:

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

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

DIRECTORS:

During the year under review, Syndicate Bank has appointed Mr. H.N.Vishweshwar in the place of Mr. R. Venkatraman as its nominee Director on the Board of the Company and Exim Bank has appointed Mr. K. Uma Maheswaran in the place of Mr. S. Prahalthan Iyer as its nominee Director on the Board of the Company.

Mr. C.K. Rao, Mr. Vasudev Chaturvedi and Mr. D. Venkat Ratnam, who were appointed as an Additional Directors will be regularized at the ensuing Annual General Meeting.

Mr. Rajaveeraiah Kodali, Director has resigned from the Board of Directors of the Company.

Mr.P.Ramachandra Raju, Director has resigned from the Board of Directors of the Company.

In Accordance with the provisions of the Companies Act, 1956 and Article of Association of the Company, two of your Directors Mr. Harish Cherukuri, Managing Director and Mr. Srinivas Kodali Executive Director, retire by rotation and being eligible offer themselves for re - appointment.

STATUTORY AUDITORS:

M/S.P.Srinivasan & Co., Chartered Accountants, the Statutory Auditors of the Company retires at the Conclusion of the ensuing Annual General Meeting and are eligible for re - appointment.

CONSERVATION OF ENERGY:

Conservation of energy, Technology Absorption & Foreign exchange earnings and information pursuant to Section217(1 )(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are annexed hereto and form part of this report.

PARTICULARS OF EMPLOYEES:

In terms of sub - section (2A) of section 217 of the Companies Act, 1956, read with the Companies

(Particulars of Employees) Rules 1975 as amended, the Company has One employees drawing salary exceeding Rs. 24.00 Lakhs per annum or Rs.2.00 Lakhs per month during the year under review.

HUMAN RELATIONS:

During the period and review the industrial relations continued to be cordial at all the units.

ACKNOWLEDGEMENT:

Your Directors take this opportunity to offer their sincere thanks for continued assistance and cooperation extended to the Company by various departments of the Central and State Governments, Government Agencies, Financial Institutions, Banks, and other statutory authorities.

Your Directors also take this opportunity to offer their sincere thanks to shareholders, customers, creditors and other related organizations, for their continued support and Cooperation, and have helped in the Company's growth.

Your Directors also wish to thank the employees at all levels for the co-operation extended by them in achieving the results.

for and on behalf of the Board of Directors

Place: Hyderabad Ramesh Bandari Srinivas Kodali Harish Cherukuri

Date: 02nd September, 2011 Company Secretary Executive Director Managing Director

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Mar 31, 2010

The Directors of your Company have pleasure in presenting the 29th Annual Report together with the audited statement of accounts for the year ended March 31st, 2010.

FINANCIAL RESULTS (Rs. in Lakhs)

Current year Previous year ended 31 -03-2010 ended 31 -03-2009

1. Sales and other Income 19263.78 18343.06

2. Profit before interest and depreciation 1405.00 1290.36

3. Interest and Finance Charges 1344.94 1254.68

4. Depreciation 846.16 847.85

5. Profit after interest and Depreciation (786.09) (812.17)

6. Provision for Taxation

a) Current Tax

b) Fringe Benefit Tax - 6.22

c) Deferred Tax/(Asset) ( 787.13) (534.49)

7. Prior period item - 13.87

8. Net Profit After tax 1.04 (297.77)

9. Profit brought forward from previous year 957.53 1255.30

10. Profit and Loss A/c Balance 958.57 957.53

APPROPRIATIONS

1. Surplus carried forward to Balance Sheet 958.57 957.53

REVIEW OF OPERATIONS:

During the year under review, company has achieved a turnover of Rs. 19264 lakhs as against Rs.18343 lakhs in the previous year, registering a growth of 5%. With the increased turnover, the company has reached to break even level and earned a marginal profit of Rs.1 lakh as against the loss of Rs.298 lakhs in the previous year. This is after considering the deferred tax asset. Significant increase in sales performance during the second half of the year by Rs.2604 lakhs compared to previous year has facilitated the company to earn a profit against the loss during the previous year. This is due to the various steps taken at the plant level to improve the operating efficiencies by minimizing the absenteeism in work force after conclusion of wage agreement and ensuring availability of adequate inputs for uninterrupted production. But for the imposition of power cut and un-scheduled interruption in power supply, the operations would have been improved further.

However, the performance of the company is expected to increase substantially during the next financial year due to improved operations as well as increase in realization in sale price. In addition, company has taken steps to dispose off loss making unit, Garment Division and bring the Gas Based Power unit into operation which will generate

additional income. Combination of all these efforts shall yield to have better performance in the next financial year.

TEXTILE INDUSTRY:

Overall performance of the industry during the year under review was still suffering from the economic impact of the financial collapse of the world markets in 2008. Sales realisation began to improve during the last quarter of the financial year due to rebound in the world economy. In addition with the improvement in the USA economy, dollar began to appreciate against other currencies in the world including the rupee. This has improved exports which in turn improved realisations in the domestic market. In addition domestic market also started recovering from the recession resulting in Improvement in the market. This is expected to continue in the next financial year as economies throughout the world are recovering from the recession.

Infrastructure bottlenecks are affecting the competitiveness of the industry vs. the competitors. Industry has been affected by the substantial power cuts imposed during the summer months every year and increases in power costs throughout the country due to inefficiencies in the grid system. In addition labour costs continue to increase due to

shortage of skilled manpower and increases in the DA by the government due to inflation. Interest rates have also begun to increase during the last financial year due to tightening of monetary policy by the RBI to contain the inflation. Even though sales realization have began to improve the increase in operating costs and infrastructure problems is affecting the profitability of the industry.

OUTLOOKONOPPORTUNTTIES, RISK AND CONCERN:

The fundamental growth drivers of Indian economy remain strong despite the economic turmoil in the world. There would be growing opportunities in the international market as well as domestic market. The consumption is growing in response to growing per capita income, population and strong retail push. With regards to textile industry, there are significant opportunities in the domestic market as more consumers are buying readymade garments and also consumption of the cloth per capita continues to increase due to growth in the economy which is adding to the purchasing power of the Consumers.

Macro economic factors including rupee appreciation increase in interest rates, in usages, increase in power tariff and powercuts are the major risk factors presently for the textile industry. If there is an appreciation of rupee, then the competitiveness of industry vs.other countries will decrease. Since the products would be diverted to the domestic market, the price realization will decrease even though there is growth in the domestic consumption. Increase in interest rates will affect the profitability. Since the industry is capital intensive.

ADEQUACY OF INTERNAL CONTROLS:

The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded, and protected against loss from unauthorized use of disposition, and that transactions are authorized, recorded, and reported correctly. The internal control system is supplemented by an extensive programme of internal audits, review by management and documented policies, guidelines and procedures.

The internal control system is designed to ensure that the financial and other records are liable for preparing financial statements and other data and for maintaining accountability of assets. The audit Committee comprising independent Directors will review the internal control system on quarterly basis.

EXPORTS:

On the export front, your Companys exports has been increased to Rs. 2192 lakhs during the year 2009-2010 as Compared to Rs.1956 Lakhs in the previous year thereby registering a growth of 12%. The Company expects further growth in the exports in the fiscal year 2010-2011.

WIND MILL:

During the year under review, the 1.8 M.W. Wind power Mill has generated 24, 45,482 units as against 20,21,064 units in the previous year.

GAS POWER PROJECT:

During the year under review, 3MW Gas based Power Plant was not in operation due to non availability of gas from the isolated well allotted to the Company by Oil and Natural Gas Corporation (ONGC).

Your Directors have pleasure to inform that steps have been taken to bring the unit into operation through a lease agreement with svin power plant private limited. Who shall invest for continued supply of gas and undertake to run the plant on the profitable terms.

GARMENT DIVISION:

"The Company had entered the Garment business in 2007 with a view to establish its presence and maximize profits across the entire spectrum of the textile business. The unit is engaged in the manufacturing and sale of garments at its owned facility at Hyderabad. The management has carried out a comprehensive review of the business of the Company and it was found that the return to the Company from the Garment unit is not commensurate with the Investment and the efforts put into the Undertaking. The potential for Growth has remain unrealized and it was decided to completely exit the Garment business in the event of being able to realize a fair value by disposing off the undertaking.

Your Directors have pleasure to inform that the Company has identified a buyer, and the Board of Directors at their meeting held on 07.05.2010 has given their consent to dispose off the garment division to Marigold landmark Estates Private Limited who has offered the fair market value.

Accordingly members of the Company have approved the resolution for sale of garment Division through postal Ballot

The Board is satisfied that it is in the Best interest of the Company, shareholders and its lenders, to sell the said undertaking " FIXED DEPOSITS:

The fixed Deposits outstanding as on 31.03.2010 amounted to Rs.626.51 Lakhs and there were no overdue Deposits. INSURANCE:

The properties of the Company including its building, plant and machinery and stocks as required have been adequately insured. CORPORATE GOVERNANCE: The Company is in conformity with the code of Corporate Governance enunciated in clause 49 of the Listing agreement with Stock Exchanges. A separate report on Corporate Governance is annexed hereto and form part of Directors Report together with a certificate from the Auditors of the Company confirming compliance of the Conditions of Corporate Governance. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors Confirm that: i) In the preparation of the annual accounts, the applicable accounting standards have been followed: ii) Such accounting policies have been selected 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 that year: iii) The proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities: iv) The annual accounts have been prepared on a going concern basis.

DIRECTORS:

During the year under review, Syndicate Bank has appointed Mr. R.Venkatraman in the place of Mr.

P.K.Chandara Sekhar Herle as its nominee Director on the Board of the Company. In Accordance with the provisions of the Companies Act, 1956 and Article of Association of the Company, two of your Directors Mr. K.Rama Mohana Rao and Mr. P.Ramachandra Raju retire by rotation and being eligible offer themselves for re - appointment. STATUTORY AUDITORS:

M/S.P.Srinivasan & Co., Chartered Accountants, the Statutory Auditors of the Company retires at the Conclusion of the ensuing Annual General Meeting and are eligible for re - appointment. CONSERVATION OF ENERGY: Conservation of energy, Technology Absorption & Foreign exchange earnings and information pursuant to Section217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are annexed hereto and form part of this report. PARTICULARS OF EMPLOYEES: In terms of sub - section (2A) of section 217 of the Companies Act, 1956, the Company has no employees drawing salary exceeding Rs. 24.00 Lakhs per annum or Rs.2.00 Lakhs per month during the year under review.

HUMAN RELATIONS:

During the period under review the industrial relations continued to be cordial at all the units.

ACKNOWLEDGEMENT:

Your Directors take this opportunity to offer their sincere thanks for continued assistance and cooperation extended to the Company by various departments of the Central and State Governments, Government Agencies, Financial Institutions, Banks, and other statutory authorities.

Your Directors also take this opportunity to offer their sincere thanks to shareholders, customers, creditors and other related organizations, for their continued support and Cooperation, and have helped in the Companys growth.

Your Directors also wish to thank the employees at all levels for the co-operation extended by them in achieving the results.

For and on behalf of the Board of Directors

Place: Hyderabad

Harish Cherukuri Srinivas Kodali Ramesh Bandari Date: 14th August, 2010 Managing Director Executive Director Company Secretary