Directors Report of Rainbow Denim Ltd.

Mar 31, 2015

The Directors have pleasure in presenting the Sixteenth Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2015.

FINANCIAL RESULTS (Rs. in lacs)

YEAR ENDED YEAR ENDED 31.03.2015 31.03.2014

Profit/(Loss) before Depreciation (840.17) (1922.23)

Depreciation 1112.06 915.33

Profit/(Loss) after Depreciation (1952.23) (2837.56)

Profit/(Loss) before Tax (1952.23) (2837.56)

Tax expenses Nil Nil

Net Profit/(Loss) for the year (1952.23) (2837.56)

DIVIDEND

In view of the loss, your Directors regret their inability to recommend any Dividend for the year under review.

REVIEW OF OPERATIONS

The total production of Denim fabric during the year under review was 11.55 million meters as compared to 9.48 million meters during the previous year. The Company has achieved a sales turnover of Rs. 16726.54 lacs during the year under review as compared to a turnover of Rs. 11859.96 lacs during the previous year. The Company is a sick company as defined under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 and the Draft Rehabilitation Scheme is under implementation. The segment wise details as required by Accounting Standard – 17 are given in the notes forming part of the Accounts.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Denim capacity was around 600 million meters about five years ago which has increased to more than 1000 million meters. In the past two years, the Indian Denim industry has seen an increase in capacity of about 200-250 million meters due to capacity addition by existing players as well as entry of new payers in the field.

FUTURE PROSPECTS

The Denim industry has been growing at a steady pace but over capacity is a serious threat due to entry of several medium/large players and the increasing competition from the un organized sector. Fluctuation in the prices of Cotton and other key raw materials are some of the challenges being faced by the denim Industry. The Company is making efforts at value addition to improve its performance.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with the Auditor's Certificate regarding Compliance of the conditions of Corporate Governance pursuant to clause 49 of the Listing Agreement are annexed hereto.

The Directors refer to the observations of the Auditor and wish to state that as on the date of this Report, the Composition of the Board of Directors, is in compliance of clause 49 (II)(A)(2) of the Listing Agreement and Company is taking steps to appoint a Chief Financial Officer.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)( c ) of the Companies Act, 2013 the Directors confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2. Appropriate policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and the loss of the Company for the year ended March 31, 2015;

3. Proper and sufficient care has been taken 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;

4. The annual accounts have been prepared on a going concern basis; and

5. Internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively;

6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

AUDIT COMMITTEE

In accordance with the provisions of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has constituted an Audit Committee which presently comprises of the following Directors viz. Mr. Mahendra Lodha – Chairman, Mr. Deonath Singh, Mr. H. D. Ramsinghani and Mr. R. G. Kulkarni. The Audit Committee acts in accordance with the terms of reference specified from time to time by the Board. There were no instances when the recommendations of the Audit Committee were not accepted by the Board during the year under review.

OTHER COMMITTEES

The Company has constituted the Stakeholders Relationship Committee which presently consists of Mr. D. N. Singh (Chairman), Mr. H. D. Ramsinghani and Mr. S. S. Arora.

The Company has also constituted the Risk Management Committee which presently consists of Mr. D. N. Singh (Chairman), Mr. H. D. Ramsinghani, Mr. Mahendra Lodha and Mr. R. G. Kulkarni. The Board has formulated a Risk Management Policy covering various risks associated with the business of the Company.

The Company has also constituted the Nomination and Remuneration Committee which presently consists of Mr. Mahendra Lodha (Chairman), Mr. D. N. Singh, Mr. S. S. Arora and Mr. R. G. Kulkarni.

The Company has not constituted a Corporate Social Responsibility Committee as the Company does not fulfil the prescribed criteria.

DISCLOSURES

Information as required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 relating to the Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo is annexed hereto as Annexure A and forms a part of this Report.

No remuneration was paid to the Managing Director during the year under review and no remuneration was paid to non executive Directors other than sitting fees for attending meetings of the Board or committees thereof. There were no employees drawing remuneration in excess of the limits prescribed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the year under review or part thereof. The Details pertaining to remuneration 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 is annexed hereto as Annexure B and forms a part of the Report.

Details of loans, guarantees and investments, if any, are given under the Notes to Financial Statements.

All transactions entered in to with Related Parties during the year under review were at an arms length at prevailing market rates and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. There were no material related party transactions with the Promoters, Directors or the Key Managerial Personnel or their relatives during the year under review.

There were no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operations.

The Company has formulated a Whistle Blower Policy under which all personnel have access to the Audit Committee to report genuine concerns or grievances relating to the business activities of the Company in general.

The Business Responsibility Reporting as required by Clause 55 of the Listing Agreement is not applicable to the Company as on March 31, 2015.

The Company has an adequate system of internal controls that ensures that all assets are protected against loss from unauthorized use or disposition and all transactions are recorded and reported in conformity with generally accepted accounting principles.

There were no cases fled pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal ) Act, 2013 during the year under review.

DIRECTORS

During the year under review, four Board Meetings were held on May 28, 2014, July 31, 2014, November 11, 2014 and February 11, 2015.

Mr. S. S. Arora retires by rotation at the forthcoming Annual General Meeting and is eligible for reappointment.

The Board of Directors of the Company have appointed Mrs. N. H. Ramsinghani as an Additional Director. In accordance with the provisions of sections 161 of the Companies Act, 2013. Mrs. Ramsinghani will hold office of the Director up to the date of the forthcoming Annual General Meeting. The Company has received a Notice from a Member pursuant to the provisions of Section 160 of the Companies Act, 2013 signifying the intention to propose the name of Mrs. N. H. Ramsinghani as a Director of the Company.

The Board of Directors of the Company have appointed Mr. R. G. Kulkarni as an Additional Director. In accordance with the provisions of sections 161 of the Companies Act, 2013, Mr. R. G. Kulkarni will hold office of the Director up to the date of the forthcoming Annual General Meeting. The Company has received a Notice from a Member pursuant to the provisions of Section 160 of the Companies Act, 2013 signifying the intention to propose the name of Mr. R. G. Kulkarni as a Director of the Company. In accordance with the provisions of sections 149 and 152 of the Companies Act, 2013 and the rules made there under, it is proposed to appoint Mr. R. G. Kulkarni as non executive Independent Director for a period of five years from the date of the forthcoming Annual General Meeting.

All Independent directors have given declarations that they meet the criteria of independence as laid down in Section 149(6) of the Companies Act,2013 and Clause 49 of the Listing Agreement.

The Board of Directors have framed a policy in relation to remuneration of directors, Key Managerial Personnel and senior Management and it lays down criteria for selection and appointment of Board Members.

The performance evaluation of the Chairman and the non executive Directors was carried out by the Independent Directors of the Company in their meeting held on February 11, 2015.

STATUTORY AUDITORS REPORT

There is no qualification in the Statutory Auditors Report for the year under review.

AUDITORS

M/s. Dayal & Lohia, Chartered Accountants, (Membership No 102200W) the Auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a certificate from them certifying that their appointment, if made, would be in compliance with all the applicable provisions of the Companies Act, 2013.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules made there under, the Company has appointed Ajay A arora & Co to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed hereto as Annexure C and forms a part of this Report. The Directors refer to the observations of the Secretarial Auditor and wish to state on the date of this Report that the composition of the Board of Directors is in Compliance of Clause 49(II)(A)(2) of the Listing Agreement and the Company is taking steps to appoint a Chief Financial Officer.

COST AUDIT

The Company has appointed M/s. J. Verma & Associates, qualified Cost Auditors for conducting the Audit of cost records for the financial year 2015-16. The Company has received a Certificate from Cost Auditors certifying their independence and arm's length relationship with the Company.

The Cost Audit Compliance Report for the financial year ended 31st March, 2014 was fled on September 20, 2014 with Ministry of Corporate Affairs, New Delhi. The Cost Audit Report for the financial year ended 31st March, 2015 will be fled within the stipulated time.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return in Form MGT 9 pursuant to the provisions of Section 92 of the Companies Act, 2013 is annexed hereto as Annexure D and forms a part of this Report.

FIXED DEPOSITS

The Company has not accepted any public deposits and as such no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

SAFETY, ENVIRONMENTAL CONTROL & PROTECTION

The Company has taken all the necessary steps for Safety and Environmental Control and Protection at its plant at Lalru.

INDUSTRIAL RELATIONS

The Industrial Relations remained cordial during the year under review.

ACKNOWLEDGEMENT

Your Directors sincerely record their appreciation with gratitude for the continued support and assistance extended to the Company by the Financial Institutions, Banks and various Government Departments and Agencies.

CAUTIONARY STATEMENT

Statements in this Report describing the Company's objectives, projections, estimates, expectations or predictions are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include domestic and global prices of Methanol/Naphtha, changes in Government regulations, future availability of gas, litigation and industrial relations. The Company assumes no responsibility to amend, modify or revise any of the statements on the basis of subsequent developments, information or events.

For and on behalf of the Board

Place : Mumbai H. D. RAMSINGHANI

Date : August 4, 2015 CHAIRMAN & MANAGING DIRECTOR

DIN: 00035416

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Mar 31, 2014

Dear members,

The Directors have pleasure in presenting the Fifteenth Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2014.

FINANCIAL RESULTS (Rs. in lacs)

YEAR ENDED YEAR ENDED 31.03.2014 31.03.2013

Profit/(Loss) before Depreciation (1922.23) (138.96)

Depreciation 915.33 915.98

Profit/(Loss) after Depreciation (2837.56) (1054.94)

Profit/(Loss) before Tax (2837.56) (1054.94)

Tax expenses Nil Nil

Net Profit/(Loss) for the year (2837.56) (1054.94)

DIVIDEND

In view of the loss, your Directors regret their inability to recommend any Dividend for the year under review.

INCREASE IN SHARE CAPITAL

The Company is a sick company registered with the Board for Industrial and Financial Reconstruction (BIFR) as required by the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985. The Hon''ble BIFR has sanctioned the Draft Rehabilitation Scheme (DRS) which, inter alia, envisages infusion of funds by the Promoters and other reliefs and concessions. Pursuant to the said DRS approved by the BIFR, the Company has allotted 60,00,000 equity shares of Rs. 10/- each for cash at par to the promoters of the Company during the year under review and consequently the Issued, Subscribed and Paid up Capital stands increased from Rs. 7,28,37,430/- divided in to 72,83,743 equity shares of Rs. 10/- each to Rs. 13,28,37,430/- divided in to 1,32,83,743 equity shares of Rs. 10/- each.

REVIEW OF OPERATIONS

The total production of Denim fabric during the year under review was 9.48 million meters as compared to 14.69 million meters during the previous year. The Company has achieved a sales turnover of Rs. 11,859.96 lacs during the year under review as compared to a turnover of Rs. 15,836.70 lacs during the previous year.

CORPORATE GOVERNANCE

The Report on Corporate Governance along with the Auditor''s Certifi cate regarding Compliance of the conditions of Corporate Governance as also a Management Discussion and Analysis Report pursuant to Clause 49 of the Listing Agreement are annexed hereto.

DIRECTORS RESPONSIBILITY STATEMENT

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

1. In the preparation of the Annual Accounts, the applicable accounting standards have been followed;

2. Appropriate Policies have been selected and applied consistently and have 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 as at March 31, 2014 and the loss of the Company for the year ended March 31, 2014;

3. Proper and suffi cient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. The Annual Accounts have been prepared on a going concern basis.

AUDIT COMMITTEE

In accordance with the provisions of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement, the Company has constituted an Audit Committee which presently comprises of the following Directors viz. Mr Mahendra Lodha - Chairman, Mr. Deonath Singh and Mr. Deepak Gupta.

OTHER COMMITTEES

The Company has constituted the Stakeholders Relationship Committee which presently consists of Mr D. N. Singh (Chairman), Mr H. D. Ramsinghani and Mr S. S. Arora.

The Company has also constituted the Risk Management Committee which presently consists of Mr Mr D. N. Singh (Chairman), H. D. Ramsinghani, Mr Mahendra Lodha and Mr Deepak Gupta.

SAFETY, ENVIRONMENTAL CONTROL & PROTECTION

The Company has taken all the necessary steps for Safety and Environmental Control and Protection at its plant at Lalru.

DISCLOSURE OF PARTICULARS

Information as required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 relating to the Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo is annexed hereto and forms a part of this Report.

PERSONNEL

There were no employees drawing remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 during the year under review or part thereof.

DIRECTORS

Mr. S. S. Arora retires by rotation at the forthcoming Annual General Meeting and is eligible for reappointment. In accordance with the provisions of sections 149 and 152 of the Companies Act, 2013 and the rules made there under, it is proposed to appoint Mr Mahendra Lodha and Mr D. N. Singh as non executive Independent Directors for a period of fi ve years from the date of the forthcoming Annual General Meeting.

AUDITORS REPORT

Your Directors refer to the observations made by the Auditors in their Report and wish to inform as under :

1. The Company has defaulted in repayment of dues including interest to fi nancial institutions and banks due to the diffi cult fi nancial position faced by the Company as a result of losses incurred during the year under review .

2. The Company has used short term funds for funding the accumulated losses.

AUDITORS

M/s. Dayal & Lohia, Chartered Accountants, (Membership No 102200W) the Auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a certifi cate from them certifying that their appointment, if made, would be within the limits specifi ed under Section 141(3)(g) of the Companies Act, 2013.

COST AUDIT

The Company has appointed M/s. J. Verma & Associates, qualifi ed Cost Auditors for conducting the Audit of cost records for the fi nancial year 2014-15. The Company has received a Certifi cate from Cost Auditors certifying their independence and arm''s length relationship with the Company.

The Cost Audit Report for the fi nancial year ended 31st March, 2013 was fi led on September 3, 2013 with Ministry of Corporate Affairs, New Delhi. The Cost Audit Report for the fi nancial year ended 31st March, 2014 will be fi led within the stipulated time.

FIXED DEPOSITS

The Company has not accepted any public deposits and as such no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

INDUSTRIAL RELATIONS

The Industrial Relations remained cordial during the year under review.

ACKNOWLEDGEMENT

Your Directors sincerely record their appreciation with gratitude for the continued support and assistance extended to the Company by the Financial Institutions, Banks and various Government Departments and Agencies.



For and on behalf of the Board

Place : Mumbai H. D. RAMSINGHANI Date : July 31, 2014 CHAIRMAN & MANAGING DIRECTOR

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Mar 31, 2012

The Directors have pleasure in presenting the Thirteenth Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2012.

FINANCIAL RESULTS

YEAR ENDED YEAR ENDED 31.03.2012 31.03.2011 (Rs. in lacs) (Rs. in lacs)

Profit/(Loss) before Depreciation (1014.19) 693.24

Depreciation 896.31 894.32

Profit/(Loss) after Depreciation (1910.50) (201.08)

Profit/(Loss) before Tax (1910.50) (201.08)

Tax expenses Nil Nil

Profit/(Loss) after tax (1910.50) (201.08)

Reliefs and Refunds 126.01 2532.00

Net Profit/(Loss) for the year (1784.49) 2330.92 DIVIDEND

In view of the loss, your Directors regret their inability to recommend any Dividend for the year under review.

BIFR REFERENCE

The Net worth of the company is fully eroded. Accordingly the Directors have filed a reference with the Board for Industrial and Financial Reconstruction (BIFR) as required by the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 and the Draft Rehabilitation Scheme (DRS) is under finalization.

REVIEW OF OPERATIONS

The total production of Denim fabric during the year under review was 14.29 million meters as compared to 15.07 million meters during the previous year. The Company has achieved a sales turnover of Rs. 18092.73 lacs during the year under review as compared to a turnover of Rs. 15394.71 lacs during the previous year.

FUTURE PROSPECTS

The Indian Denim market is expected to continue to grow at about 10-15% per annum in the coming years but with new players entering the market, the competition has become tighter. As a result the margins are likely to continue to be under pressure for the current year also as the Company will be unable to pass on the increased cost burden to the consumers in view of stiff competition.

CORPORATE GOVERNANCE

The Report on Corporate Governance along with the Auditor's Certificate regarding Compliance of the conditions of Corporate Governance as also a Management Discussion and Analysis Report pursuant to clause 49 of the Listing Agreement are annexed hereto. .

DIRECTORS RESPONSIBILITY STATEMENT

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

1. In the preparation of the Annual Accounts, the applicable accounting standards have been followed;

2. Appropriate Policies have been selected and applied consistently and have 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 as at March 31, 2012 and the loss of the Company for the year ended March 31, 2012;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. The Annual Accounts have been prepared on a going concern basis.

AUDIT COMMITTEE

In accordance with the provisions of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement, the Company has constituted an Audit Committee which presently comprises of the following Directors viz. Mr Mahendra Lodha - Chairman, Mr. Deonath Singh and Mr. Deepak Gupta.

SAFETY, ENVIRONMENTAL CONTROL & PROTECTION

The Company has taken all the necessary steps for Safety and Environmental Control and Protection at its plant at Lalru.

DISCLOSURE OF PARTICULARS

Information as required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 relating to the Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo is annexed hereto and forms a part of this Report.

PERSONNEL

There were no employees drawing remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.during the year under review or part thereof.

DIRECTORS

During the year under review IDBI Bank Limited has withdrawn the nomination of Mr. Umesh Jain and nominated Mr. Deepak Gupta as its Nominee Director in his place. The Board places on record its sincere appreciation of the valuable contribution made by Mr. Umesh Jain during his association with the Company.

Mr S S Arora has ceased to be a Whole Time Director of the Company w e f May 31', 2012. However, with a view to benefit from the vast experience of Mr Arora in the field of raw material purchase, the Board of Directors have appointed Mr Arora as an Advisor - Raw Material Purchase for a period of one year from June 01,2012.

Mr. D N Singh retires by rotation at the forthcoming Annual General Meeting and is eligible for reappointment.

AUDITORS REPORT

Your Directors refer to the observations made by the Auditors in their Report and wish to inform as under:

1. The Company has not disclosed information regarding dues to Micro, Small and Medium Enterprises since no information is available regarding their status.

2. The Company had to use the funds raised on short term basis for long term investment in view of the difficult financial position due to the losses incurred during the year under review. ¦

AUDITORS

M/s. Dayal & Lohia, Chartered Accountants, (Membership No 102200W) the Auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a certificate from them certifying that their appointment, if made, would be within the limits specified under Section 224 (1-B) of the Companies Act, 1956.

COST AUDIT

In accordance with the provisions of Section 233B of the Companies Act,1956 read with the Companies (Cost Accounting Records) Rules, 2011 and the various circulars issued by the Ministry of Corporate Affairs, the Company is required to file Compliance Report for the year 2011-12 and to undertake an Audit of the Cost Records from the financial year 2012-13 onwards. The Company has appointed M/s J Verma and Associates, Cost Accountants, Jalandhar as the Cost Auditors for filing of the Compliance Report for 2011 -12 and for Audit of Cost records for the year 2012-13. The Compliance Report for the year 2011-12 will be filed on or before December 31, 2012.

FIXED DEPOSITS

The Company has not accepted any public deposits and as such no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

INDUSTRIAL RELATIONS

The Industrial Relations remained cordial during the year under review.

ACKNOWLEDGEMENT

Your Directors sincerely record their appreciation with gratitude for the continued support and assistance extended to the Company by the Financial Institutions, Banks and various Government Departments and Agencies.

For and on behalf of the Board

Place : Mumbai H. D. RAMSINGHANI

Dated : August 10, 2012 CHAIRMAN & MANAGING DIRECTOR

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Mar 31, 2010

The Directors have pleasure in presenting the Eleventh Annual Report together with the Audited Statement of Accounts for the year ended March 31,2010.

FINANCIAL RESULTS

YEAR ENDED YEAR ENDED

31.03.2010 31.03.2009

(Rs. in lacs) (Rs.in lacs)

Profit/(Loss) before Depreciation (750.57) (709.89)

Depreciation 890.89 876.36

Profit/(L*oss) after Depreciation (1641.46) (1586.25)

Prior period Expenditure - 1.16

Profit/(Loss) before Tax (1641.46) (1587.41)

Fringe benefit Tax 0.61 16.83

Net Profit/(Loss) for the Year (1642.07) (1604.24)

Loss as per last Balance Sheet (3220.04) (1615.80)

Balance carried to Balance Sheet (4862.11) (3220.04)

DIVIDEND

In view of the loss, your Directors regret their inability to recommend any Dividend for the year under review. BIFR REFERENCE

The Net worth of the company is fully eroded. Accordingly the Directors have filed a reference with the Board for Industrial and Financial Reconstruction (BIFR) as required by the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985.

REVIEW OF OPERATIONS

The total production of Denim fabric during the year under review was 15.34 million meters as compared to 16.21 million meters during the previous year. The Company has achieved a sales turnover of Rs. 12830.79 lacs during the year under review as compared to a turnover of Rs. 13440.30 lacs during the previous year.

FUTURE PROSPECTS

The future prospects for the Denim business continue to be subdued due to increase in costs of raw materials and other inputs which are growing steadily over the years. In view of the stiff competition, the Company is unable to pass on the burden to the consumers. The present trend is expected to continue in the near future during which the Company is likely to face difficult times.

CORPORATE GOVERNANCE

The Report on Corporate Governance along with the Auditors Certificate regarding Compliance of the conditions of Corporate Governance as also a Management Discussion and Analysis Report pursuant to clause 49 of the Listing Agreement are annexed hereto.

DIRECTORS RESPONSIBILITY STATEMENT

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

1. In the preparation of the Annual Accounts, the applicable accounting standards have been followed;

2. Appropriate Policies have been selected and applied consistently and have 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 as at March 31, 2010 and the loss of the Company for the year ended March 31, 2010;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. The Annual Accounts have been prepared on a going concern basis.

AUDIT COMMITTEE

In accordance with the provisions of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement, the Company has constituted an Audit Committee which presently comprises of the following Directors viz. Mr Mahendra Lodha - Chairman, Mr. Deonath Singh and Mr. Umesh Jain.

SAFETY, ENVIRONMENTAL CONTROL & PROTECTION

The Company has taken all the necessary steps for Safety and Environmental Control and Protection at its plant at Lalru.

DISCLOSURE OF PARTICULARS

Information as required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 relating to the Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo is annexed hereto and forms a part of this Report. -

PERSONNEL

There were no employees drawing remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 during the year under review or part thereof.

DIRECTORS

Mr. D N Singh retires by rotation at the forthcoming Annual General Meeting and is eligible for reappointment.

AUDITORS REPORT

Your Directors refer to the observations made by the Auditors in their Report and wish to inform as under:

1. Regarding Loans & Advances due from Companies, the Management is of the opinion that these amounts are recoverable and hence do not require any provision.

2. The Company is in the process of obtaining confirmation from Banks and Financial Institutions.

3. The net worth of the Company has been fully eroded and the Company has filed the reference with BIFR.

4. The Company had to use the funds raised on short term basis for long term investment due to the losses incurred during the year under review.

AUDITORS

M/s. Dayal & Lohia, Chartered Accountants, (Membership No 102200W) the Auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a certificate from them certifying that their appointment, if made, would be within the limits specified under Section 224 (1-B) of the Companies Act, 1956.

INDUSTRIAL RELATIONS

The Industrial Relations remained cordial during the year under review.

ACKNOWLEDGEMENT

Your Directors sincerely record their appreciation with gratitude for the continuedsupport and assistance extended to the Company by the Financial Institutions, Banks and various Government Departments and Agencies.

For and on behalf of the Board

H. D. RAMSINGHANI CHAIRMAN & MANAGING DIRECTOR

Place : Mumbai Date : July 26, 2010