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Directors Report of Salona Cotspin Ltd.

Mar 31, 2015

Dear Members,

The Directors have great pleasure in presenting their Twenty-first Annual Report together with Audited final statements of the Company for the year ended 31st March, 2015.

FINANCIAL HIGHLIGHTS

Details ( Rupees in Lacs )

31.03.2015 31.03.2014

INCOME

Sales and Other operating Receipts 10303.37 10637.85

Other Income 37.05 24.46

Total 10340.42 10662.31

Gross Profit before interest, depreciation and tax 1000.47 1671.14

Less: Interest 303.33 337.77

Profit/(Loss) after interest, but before depreciation and tax 697.14 1333.37

Less: Depreciation 443.34 570.38

PROFIT BEFORE TAX 253.80 762.99

Less: Taxes 43.21 196.54

NET PROFIT AFTER TAX 210.59 566.45

Add: Opening Surplus 1518.57 1041.00

Total Profit available for appropriation 1729.15 1607.45

APPROPRIATION

The above Profit is proposed to be appropriated as stated below:-

General Reserve 0.00 15.00

Proposed Dividends & Tax on Dividend 0.00 73.88

Surplus carried over to Balance sheet 1729.15 1518.57

DIVIDEND:

In order to strengthen the long term resources for the future and considering the decrease in Profits, the Board of Directors regret their inability to recommend any dividend for the financial year 2014-15.

REVIEW OF OPERATIONS:

During the year under review, your Company has recorded marginally lower turnover of Rs.10180.32 Lacs as against Rs.10518.92 Lacs in the previous year inspite of increase in Yarn production and due to lower prices realised for finished goods. The Sales turnover includes Export Sales of Rs. 2299.79 Lacs as against Rs.3875.57 Lacs in the previous year. The yarn production increased to 42.94 Lacs Kgs as against 41.18 Lacs Kgs. in last year. The mill has produced Knitted fabrics of 21.48 Lacs Kgs. as against 18.43 Lacs Kgs. in last year. On account of evacuation back out imposed by the TANGEDCO, the windmills generated 67.84 Lacs units (net) of wind electricity as against 85.92 Lacs units in the previous year. The Wind electricity was captively consumed by use in the Textile Mill.

The overall performance should be considered as satisfactory.

OUT LOOK FOR THE IMMEDIATE FUTURE:

Though the textile industry in spinning sector witnessed a crises of mismatch by steep fall in yarn prices the Company has earned Profit during this year. Your Company continues to pursue cost reduction and better efficiency in production; hence it is optimistic to perform better in the coming years with stability in the prices of raw materials and finished goods.

EVENT SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

There are no material changes and commitments affecting the financial position of the Company, subsequent to the end of the financial year.

PUBLIC DEPOSITS

The Company has not accepted nor holds any public deposits within meaning of Section 73 to 76 of the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules 2014 during the year under review.

CORPORATE GOVERNANCE:

As per SEBI circular dated 15th September 2014 (Ref CIR/CFD/POLICY CELL/7/2014) compliance with the provisions of Clause 49 is not mandatory, for the time being for Companies whose paid up equity share capital does not exceed Rs.10 crore and Net Worth does not exceed Rs.25 crore, as on the last day of the previous financial year. Hence Corporate Governance Report is not attached to and is not forming part of the Annual Report.

However adopting the past practice, a separate section on Corporate Governance, Management Discussion and Analysis and a certificate from the Auditors of the Company regarding compliance of condition of Corporate Governance is furnished voluntarily.

EXTRACT OF ANNUAL RETURN:

As required under Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 an extract of annual return as on 31st March 2015 in MGT 9 is given which form part of this Annual Report is enclosed as Annexure I.

DIRECTORS AND MANAGERIAL PERSONNEL:

The Tenure of office of Shri Shyamlal Agarwala, (DIN 00003055) as Managing Director, expired on 31st March 2015. The Nomination and Remuneration committee held on 30th March 2015, approved re-appointment of Sri Shyamlal Agarwala as Managing Director of the Company for a further period Five years, on enhanced remuneration with effect from 1st April 2015. Hence the Board of Directors, at their meeting held on 30th March 2015, re-appointed Shri Shyamlal Agarwal as Chairman and Managing Director for further period of five years, on enhanced remuneration. Such appointment and payment of remuneration are subject to approval of shareholders in the ensuing Annual General Meeting.

Smt. S. Meenakumari (DIN 07143889) was co-opted as an Additional Director (Women) on 30th March, 2015 by the Board of Directors and she hold office up to the date of next Annual General Meeting of the Company.

In order to comply with the provisions of section 149 read with Schedule IV of the Companies Act, 2015 and clause 49 of the Listing agreements entered with Stock Exchanges Smt. S. Meenakumari is proposed to be appointed as Independent Directors. The said Director has consented to act as independent Directors and in respect of whom nominations with required deposit have also been received from members.

KEY MANAGERIAL PERSONNEL

The Company has appointed the following persons as Key Managerial Personnel during the year.

Name of the Persons Designation

Sri Shyamlal Agarwala Managing Director

Sri Manoj Kumar Jhajharia Joint Managing Director

Sri M.S. Selvaraj Chief Finance Officer

Sri K.V. Murugan Company Secretary

AUDIT COMMITTEE

The Audit Committee comprises of

1. Sri G.V.S. Desikan - Chairman (Non-Executive Independent Director)

2. Sri Dhiresh Jayasi - Member (Non-Executive Independent Director)

3. Sri C. Thirumurthy - Member (Non-Executive Independent Director)

The Board has implemented the suggestions made by the Audit Committee from time to time.

Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the Listing agreement the Board has carried out an evaluation of its own performance based on the specific duties, obligation and the execution of the same, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and other Committees, the performance evaluation of the Independent Directors, Chairman and Managing Director. The Board expressed their satisfaction with the execution process.

BOARD MEETINGS:

The Board of Directors met Six times during this financial Year.

1. 26th May 2014 2. 25th July 2014 3. 11th August 2014 4. 13th November 2014 5. 11th February 2015 6. 30th March 2015

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not given any loans or guarantees governed under the provisions of Section 186 of the Companies Act 2013. The details of the Investments made by the Company are given in the notes to the financial statements.

ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a vigil mechanism for Directors and employees to report concerns about un ethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics. The policy has been posted in the website of the Company viz., www.salonagroup.com

POLICY ON NOMINATION AND REMUNERATION COMMITTEE

The Board of Directors have framed a policy setting out the framework for payment of remuneration to Directors, Key Managerial Personnel and Senior Management Personnel of the Company. The policy is explained as part of the Corporate Governance Report.

The Committee ensures that:

a. The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully.

b. Relationship of remuneration to performance is clear and meets appropriate performance benchmarks and

c. Remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on arm's length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act 2013 are complied. Further no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. Hence reporting under AOC-2 is not required. Approval of Audit Committee was obtained for transactions of repetitive nature on annual basis. All related party transactions are placed before the Audit Committee and Board of Directors for their review. The policy on Related Party transactions is available in the website www.salonagroup.com

SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS

There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status and the Company's operation in future.

DIRECTORS' RESPONSIBILITY STATEMENT:

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

a) that in the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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

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

d) that your Directors had prepared the annual accounts on a going concern basis.

e) The Directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

AUDITORS:

The present Auditors of the Company, M/s. VKS Aiyer & Co., Chartered Accountants, Coimbatore were appointed for a term of three years pursuant to the resolution passed by the members at the Annual General Meeting held on 29th September 2014. A resolution ratifying their appointment in terms of Section 139 is also placed before the shareholders for their approval at the ensuing Annual General Meeting.

SECRETARIAL AUDIT

Pursuant to provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company appointed Mr. G Soundararajan, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The report is annexed herewith as Annexure - II

No adverse qualifications/comments have been made in the said report by the Practicing Company Secretary.

COST AUDITOR

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules 2014 as amended from time to time, the Board of Directors, on the recommendation of Audit Committee, has appointed Sri B. Venkateswar, Cost Accountant, Coimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year 2015 - 2016.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Company has an Internal Audit which monitors and evaluates the efficiency and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual.

To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee and to the Chairman and Managing Director of the Company.

Based on the report of internal audit function, corrective action are taken in the respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

IMPACT OF PENDING LITIGATIONS

The Company received favourable order from the Appellate Deputy Commissioner (CT) (MAIN) for the sales tax appeals against the orders passed by the Assistant Commissioner (CT) (FAC), R.S.Puram Circle, Coimbatore in respect of Carbon Credit receipt for the years 2008-09 and 2009-10. Subsequently the department has gone on further appeal with the Appellate Tribunal and the matter is pending.

STATEMENT ON RISK MANAGEMENT POLICY

Pursuant to Section 134(3) (n) of the Companies Act 2013 and Clause 49 of the Listing agreement, the Company has constituted a Risk Management Committee. The Committee has developed a Risk Management Policy and implemented the same. The details of the Committee and its terms of reference are set out in the Corporate Governance report forming part of the Board's report.

At present the Company has not identified any element of risk which may be a threat for the existence of the Company.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Company has constituted Corporate Social Responsibility (CSR) Committee which shall recommend to the Board, the activities to be undertaken by the Company as specified in Schedule VII, recommend the amount of expenditure to be incurred on such activities and monitor the CSR Policy of the Company. The CSR Committee constituted by the Board consisted of the following Directors with effect from 13th November 2014

1. G.V.S. Desikan - Chairman

2. Shyamlal Agarwala - Member

3. Manoj Kumar Jhajharia - Member

The Company has partially spent the amount stipulated under the requirements of the Act. The amount spent on CSR activities during the year 2014-15 is Rs. 48320/-. The amount remaining unspent namely Rs. 2,44,481/- will be spent during the year 2015-16. The Company is in the process of identifying eligible projects after which the unspent amount will be deployed for the said purpose.

STATUTORY DISCLOSURES

The particulars required to be included in terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 on Conservation of Energy, etc., is enclosed as Annexure III.

No employee of the Company was in receipt of remuneration of Rs.60 Lakhs per annum or more and no employee of the Company employed for the part of the financial year 2015 was in receipt of remuneration of Rs. Five Lakhs per month or more.

The information required under Section 197(12) of the Companies Act 2013 read with Companies (Ap- pointment and Remuneration of Managerial Personnel) Rules 2014 and forming part of the Directors report for the year ended 31st March 2015 is enclosed as Annexure IV.

None of the employees listed in the said Annexure is a relative of any Director of the Company. None of the employees hold (by himself or along with his spouse and dependent children) more than two percent of the equity shares of the Company.

INDUSTRIAL RELATIONS:

The Industrial relations continued to remain cordial during the period and the Board places its apprecia- tion for the services rendered by the staff and employees of the Company.

FINANCES:

During the year under review, the Reserves and Surplus, representing credit balance in the Profit and Loss Account stood at Rs.1729.15 Lacs (Rs.1518.57 Lacs credit balance in the previous year). The Company met all financial commitments to the Bankers on account of Term Loan and Working Capital Credit.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company sends periodical letters to all shareholders whose dividends are unclaimed so as to en- sure that they receive their rightful dues. Efforts are also made in co-ordination with the Registrar to locate the shareholders who have not claimed their dues.

During the year, the Company has transferred a sum of Rs. 1,55,782/- to Investor Education & Protection Fund, the amount which was due and payable and remained unclaimed for a period of seven years, as provided in Section 125 of the Companies Act, 2013.

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has received necessary declaration from each Independent Director of the Company un- der Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their independence laid down in section 149(6).

LISTING:

The equity shares of the Company are listed and traded in the Stock Exchanges of Chennai, Ahmadabad and Calcutta and the Company has paid the annual listing fees to Stock Exchanges for the financial year 2014-15.

Ahmedabad and Madras Stock Exchanges for the financial year 2014-15.

The Equity Shares of the Company are permitted for trading in BSE Indonext segment - under group "S" of Bombay Stock Exchange Limited and subsequently withdrawn on 24th June 2014 due to exit option and de-recognition to the stock exchanges.

The NSE has admitted the Securities of our Company for dealings on the National Stock Exchange (Capital Market Segment) with effect from 9th August, 2010 and this agreement discontinued due to de-recognition of Madras Stock Exchange on 21st November 2014.

Members have option to hold their shares in dematerialized form through the National Securities Depositary Limited (NSDL) and Central Depositary Services (India) Limited (CDSL). The ISIN of the Company is INE498E01010.

ACKNOWLEDGEMENT :

The Directors wish to place on record their gratitude to State Bank of India ,Union Bank of India, Oriental Bank of Commerce, and The Catholic Syrian Bank Limited for their financial assistance. Your Directors also take this opportunity to express their appreciation of the co-operation extended by the employees and the Shareholders' for their appreciation of the managements' efforts expressed at the general meetings of the Company.

The Board dedicates its prayers to invoke the blessing of Lord Vishnu, Goddess Lakshmi, Lord Shiva and Goddess Sakthi for the continued prosperity of the Company and all its stakeholders.

FOR AND ON BEHALF OF THE BOARD

Place: Coimbatore SHYAMLAL AGARWALA Date : 22nd May, 2015 Chairman


Mar 31, 2014

The Members

The Directors have great pleasure in presenting their Twentieth Annual Report together with Audited financial statements of the Company for the year ended 31st March, 2014.

1. WORKING RESULTS

Details (Rupees in Lacs )

31.03.2014 31.03.2013

INCOME

Sales and Other operating Receipts 10637.85 8570.34

Other Income 24.46 13.29

Total 10662.31 8583.63

Gross Profit before interest, depreciation and tax 1671.14 1347.77

Less: Interest 337.77 428.80

Profit/(Loss) after interest, but before depreciation and tax 1333.37 918.97

Less: Depreciation 570.38 547.91

PROFIT BEFORE TAX7 62.9937 1.06

Less: Provision for Income Tax - Current Tax 152.60 78.00

Less: Provision for Deferred Tax Liability (Net) 43.12 (18.30)

Less: Prior Year Taxes 0.82 0.11

NET PROFIT/(LOSS) AFTER TAX 566.45 311.25

Add: Opening Surplus 1041.00 729.75

Total Profit available for appropriation 1607.45 1041.00

APPROPRIATION

The above Profit is proposed to be appropriated as stated below:-

Proposed Dividends & Tax on Dividend 73.88 0.00

Surplus carried over to Balance sheet 1533.57 1041.00

2. REVIEW OF OPERATIONS:

During the year under review, the Company achieved further growth in volume of production and sales of yarn when compared with the previous year. The Company achieved much better working results than in the previous year due to better capacity utilisation, due to stability in supply of power and prices of cotton.

The sales turnover was Rs.10518.92 Lacs as against Rs.8518.13 Lacs in the previous due to increase in Yarn production and increase in yarn prices. The Sales turnover includes Export Sales of Rs. 3875.57 Lacs as against Rs.1964.01 Lacs in the previous year. Even the yarn production increased to 41.18 Lacs Kgs as against 36.23 Lacs Kgs. in last year. The mill has produced Knitted fabrics of 18.43 Lacs Kgs. as against 18.44 Lacs Kgs. in last year. Though the evacuation back out was imposed by the TANGEDCO, the windmills generated 85.92 Lacs units (net) of wind electricity as against 83.20 Lacs units in the previous year. The Wind electricity was captively consumed by use in the Textile Mill.

The overall performance should be considered as satisfactory.

3. OUT LOOK FOR THE IMMEDIATE FUTURE:

Availability of raw material viz., Cotton of good quality and at a reasonable price is always a significant factor, which will influence the performance of the Company. The textile industry in India is also counting upon imports and hence fluctuation in foreign exchange may also impact the cost of raw material. Your Directors are optimistic of achieving satisfactory results in the ensuing year.

4. DIVIDEND:

Your Directors are pleased to recommend a dividend of 12% for the year ended 31st March 2014 subject to the approval of members. The total outgo in the form of dividend including corporate dividend tax will be to the extent of Rs.73.88 Lacs.

5. FINANCES:

During the year under review, the Reserves and Surplus, representing credit balance in the Profit and Loss Account stood at Rs.1533.56 Lacs (Rs.1041.00 Lacs credit balance in the previous year). The liability for interest free sales tax deferred credit stood at Rs.106.59 Lacs. (Rs. 229.48 Lacs) The Company met all financial commitments to the Bankers on account of Term Loan and Working Capital Credit.

6. TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company sends periodical letters to all shareholders whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made in co-ordination with the Registrar to locate the shareholders who have not claimed their dues.

During the year, the Company has transferred a sum of Rs. 1,26,760/- to Investor Education & Protection Fund, the amount which was due and payable and remained unclaimed for a period of seven years, as provided in Section 205C(2) of the Companies Act, 2013.

7. FIXED DEPOSITS:

The Company has not accepted any deposits from the public so far and there is no outstanding on account of public deposits.

8. INFORMATION PURSUANT TO SECTION 217 OF COMPANIES ACT, 2013

The information in accordance with clause (e) of sub-section (1) of section 217 of the Companies Act, 2013 read with the Companies (Disclosure of Particulars in the report of the Board of Directors)Rules, 1988 and forming part of the Directors'' Report for the year ended 31st March 2014 is given in Annexure to this report.

During the period under review, the Company had no employee covered under Section 217(2A) of the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, 1975.

9. DIRECTORS:

Sri C. Thirumurthy and Sri G.V. Desikan are liable to retire by rotation under the provisions of erstwhile Companies Act, 1956 and being eligibel and the board recommands their appointment as Independent Director.

Sri Dhiresh Jayasi was appointed as Additional Director of the Company on 25th July 2014 by the Board of Directors and is liable to retire at this Annual General Meeting.

In order to comply with the provisions of Section 149 read with Schedule IV of the Companies Act, 2013 and Clause 49 of the Listing Agreements entered into with Stock Exchanges Sri.G.V.S. Desikan, Sri C. Thirumurthy and Sri Dhiresh Jayasi are proposed to be appointed as Independent Directors. The said Directors have consented to act as independent Directors and in respect of whom nominations with required deposit have been received from members.

A brief profile of the Director retiring by rotation and seeking re-election, to be provided as per Clause-49 of the Listing Agreement is annexed to the Notice of Annual General Meeting.

10. DIRECTORS'' RESPONSIBILITY STATEMENT:

In compliance of Section-217(2AA) of the Companies Act, 1956 the Directors of your Company confirm that:

- All applicable Accounting Standards have been followed in preparation of Annual Accounts and that there are no material departures;

- Such accounting policies have been selected and applied consistently and such judgments and estimates made are 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;

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

- The Annual Accounts of your Company have been prepared on a going concern basis.

11. AUDITORS:

Your Company''s Auditors M/s. VKS Aiyer & Co., Chartered Accountants, Coimbatore will retire at the ensuing Annual General Meeting and they are eligible for re-appointment.

12. Board Committees:

The Board of Directors has re-constituted the Audit Committee ad rechristened the existing Remuneration Committee as Nomination and Remuneration Committee and reconstituted it and further, the investors grievance

Committee renamed as Stakeholders Relationship Committee so as to be in line with as prescribed under the Companies Act, 2013 and Clause 49 of the amended Listing Agreement with the Stock Exchanges.

13. CORPORATE GOVERNANCE:

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this Report.

14. INDUSTRIAL RELATIONS:

The Industrial relations continued to remain cordial during the period. The Board of Directors wish to place on record their appreciation for co-operation extended by all sections of the employees.

15. LISTING:

The equity shares of the Company are listed and traded in the Stock Exchanges of Chennai, Ahmadabad and Calcutta and the Company has paid the annual listing fees to Stock Exchanges for the financial year 2013-14.

The Equity Shares of the Company are permitted for trading in BSE Indonext segment - under group "S" of Bombay Stock Exchange Limited.

The NSE has admitted the Securities of our Company for dealings on the National Stock Exchange (Capital Market Segment) with effect from 9th August, 2010.

Members have option to hold their shares in dematerialized form through the National Securities Depositary Limited (NSDL) and Central Depositary Services (India) Limited (CDSL). The ISIN of the Company is INE498E01010.

16. ACKNOWLEDGEMENT:

The Directors wish to place on record their gratitude to State Bank of India ,Union Bank of India, Oriental Bank of Commerce, and The Catholic Syrian Bank Limited for their financial assistance. Your Directors also take this opportunity to express their appreciation of the co-operation extended by the employees and the Shareholders'' for their appreciation of the managements'' efforts expressed at the general meetings of the Company.

The Board dedicates its prayers to invoke the blessing of Lord Vishnu, Goddess Lakshmi, Lord Shiva and Goddess Sakthi for the continued prosperity of the Company.

Date : 25th July 2014 FOR AND ON BEHALF OF THE BOARD Place : Coimbatore , (Sd/ SHYAMLAL AGARWALA Chairman and Managing Director


Mar 31, 2013

Dear Shareholders,

The Directors of your Company present herewith Seventh Annual Report of the Company together with the Audited Accounts for the Financial Year ended March 31, 2013.

FINANCIAL RESULTS

The working of your Company for the year under review resulted in:

(Rs.in Lakhs) Particulars March 31, 2013 March 31, 2012

Total Income 51.16 99.95

Operating Profit/ (Loss) before Depreciation, Interest and Taxes (99.63) (6.68)

Less: Depreciation and amortization 0.88 21.11

Profit/(Loss) before tax (100.51) (27.79)

Less: Current Tax 6.25 9.75

Profit (Loss) After Tax (106.76) (37.54)

DIVIDEND

Your Directors do not recommend the payment of dividend for the year ended March 31, 2013 in view of the losses.

BUSINESS REVIEW

Your Company achieved total revenue of Rs. 51.16 lakhs during the financial year under review against Rs. 99.95 lakhs in the previous financial year. The Company incurred a loss of Rs. 106.76 lakhs as compared to the loss of Rs. 37.54 lakhs in the previous year. Though the Management has been trying to get additional business for the Company, the prevailing market conditions in the existing line of business were not encouraging. The Management is hopeful of improvement in the current financial year.

MANAGEMENT DISCUSSION AND ANALYSIS

Management discussion and analysis on matters related to the business performance, as stipulated in Clause 49 of the Listing Agreement with stock exchanges, is given as a separate section in the Annual Report.

CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance requirements as stipulated under the Listing Agreement with the stock exchanges. A separate section on Corporate Governance, along with a certificate from the Auditors confirming the compliance, is annexed and forms part of the Annual Report.

INFORMATION PURSUANT TO SECTION 217 OF COMPANIES ACT, 1956

The information in accordance with clause (e) of sub-section (1) of section 217 of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of the Board of Directors)Rules, 1988 and forming part of the Directors'' Report for the year ended 31st March 2013 is given in Annexure to this report.

During the period under review, the Company had no employee covered under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

DIRECTORS

In accordance with the provisions of the companies Act, 1956, Sri CVS. Desikan and Sri Dulichand Pansari Directors of the Company will retire by rotation at the ensuing Annual General Meeting and being eligible, they offer themself for reappointment. The Directors recommend their re-appointment. The details as required under clause 49 of the listing Agreement is given as part of the notice convening the Nineteenth annual general meeting.

Shri Mahesh Agarwal resigned from his directorship on 3rd December, 2012 and the board places on record its appreciation of the services rendered during his tenure of office.

DIRECTORS'' RESPONSIBILITY STATEMENT:

In term of the provisions of Sec.217(2AA) of the Companies Act, 1956 your Directors confirm :-

a) that in the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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

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

d) that your Directors had prepared the annual accounts on a going concern basis.

AUDITORS

Your Company''s Auditors M/s. VKS Aiyer & Co., Chartered Accountants, Coimbatore will retire at the ensuing Annual General Meeting and they are eligible for re-appointment.

COST AUDITOR

The Company has appointed Sri B. enkateswar, Cost Accountant as the Cost Auditor of the Company for the year 2013-14 subject to the approval of the Central Government.

CORPORATE GOVERNANCE:

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this Report.

LISTING

The equity shares of the Company are listed and traded in the Stock Exchanges of Chennai, Ahmedabad and Calcutta and the Company has paid the annual listing fees to Stock Exchanges for the financial year 2012-13.

The Equity Shares of the Company are permitted for trading in BSE Indonext segment - under group "S" of Bombay Stock Exchange Limited.

The NSE has admitted the Securities of our Company for dealings on the National Stock Exchange (Capital Market Segment) with effect from 9th August, 2010.

Members have option to hold their shares in dematerialized form through the National Securities Depositary Limited (NSDL) and Central Depositary Services (India) Limited (CDSL).The ISIN of the Company is INE498E01010.

ACKNOWLEDGEMENT

The Directors wish to place on record their gratitude to State Bank of India ,Union Bank of India, Oriental Bank of Commerce and The Catholic Syrian Bank Limited for their financial assistance. Your Directors also take this opportunity to express their appreciation of the co-operation extended by the employees and Shareholder''s for their appreciation of the managements''s efforts expressed at the general meetings of the Company

The Board dedicates its prayers to invoke the blessing of Lord Vishnu, Goddess Lakshmi, Lord Shiva and Goddess Shakthi for the continued prosperity of the Company

FOR AND ON BEHALF OF THE BOARD

(Sd/-)

Place: COIMBATORE SHYAMLAL AGARWALA

Date : 27th May 2013 Chairman


Mar 31, 2012

The Directors have great pleasure in presenting their EIGHTEENTH Annual Report together with audited accounts of the Company for the year ended 31st March 2012.

Working Results

Rs. in Lacs Details 31st March 2012 31st March 2011

INCOME

Sales and Other Operating Receipts: 7900.80 7961.93

Other Income 36.53 22.12

Total 7937.33 7984.05

Gross profit before interest, depreciation and tax 287.17 1652.46

Less: Interest 468.81 459.89

Profit/(Loss) after interest, but before depreciation and tax (181.64) 1192.57

Less: Depreciation 513.21 594.04

Add: Prior Year Adjustments 0.00 0.07

PROFIT BEFORE TAX (694.85) 598.60

Less: Provision for Income Tax - Current Tax 2.65 121.35

Less: Provision for Deferred Tax Liability 54.50 58.10

Add: Deferred Tax Liability Reversed 101.35 0.00

Add: Provision for Deferred Tax Asset 164.05 28.00

Less: Deferred Tax Asset Reversed 4.60 0.00

NET PROFIT/(LOSS) AFTERTAX (491.20) 447.15

Add: Opening Surplus 1220.95 834.96

Total profit available for appropriation 729.75 1282.11

APPROPRIATION

The above Profit is proposed to be appropriated as stated below:-

Proposed Dividends & Tax on Dividend 0.00 61.16

Surplus Carried over to Balance Sheet 729.75 1220.95

729.75 1282.11

DIVIDEND

In As explained in details under performance review, your company has incurred loss for the year under review, and hence the Board is unable to recommend a Dividend.

REVIEW OF OPERATIONS

The Spinning sector which recovered in 2010-11 after two years of recession and adverse working was plunged again into a crisis. During the financial year under review, Sales turnover was Rs.7840.32 Lacs as against Rs.7936.03 Lacs in the previous due to decrease in Yam production and reduction in prices. Due to power cuts and frequent power interruptions during this year, the yarn production decreased to 31.87 Lacs Kgs as against 38.77 Lacs Kgs. in last year. The mill has produced Knitted fabrics of 17.72 Lacs Kgs. as against 17.04 Lacs Kgs. in last year. The windmills generated 83.99 Lacs units (net) of wind electricity as against 84.62 Lacs units in the previous year. The Wind electricity was captively consumed by use in the Textile Mill.

OUTLOOK FOR THE IMMEDIATE FUTURE

Due to steep decrease in Cotton prices and poor demand for Yarn & fabrics sales on account of closure of dyeing units in Urupur due to Pollution Control Problem, the off take of finished products slackened. Though the crisis is prevailing in the textile market, the company has earned profit during the fourth quarter of this year. More- over your Company has been pursuing cost reduction and efficiency improvements in productions and hence, it is optimistic to perform still better in the coming years.

FINANCES

During the year under review, the Reserves and Surplus, representing the credit balance in the Profit and Loss account stood at Rs. 729.75 Lacs (Rs. 1220.95 Lacs, credit balance in the previous year). The Liability for interest free sales Tax deferred credit stood at Rs.338.29 Lacs. (Rs. 437.17 Lacs). The Company met all financial commitments to the Bankers on account of Term Loan and Working Capital Credit.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company sends letters to all shareholders whose dividends are unclaimed so as to ensure that they receive their rightful dues. Efforts are also made in co-ordination with the Registrar to locate the shareholders who have not claimed their dues.

During the year, the Company has transferred a sum of Rs. 1,08,194/- to Investor Education & Protection Fund, the amount which was due and payable and remained unclaimed for a period of seven years, as provided in Section 205C(2) of the Companies Act, 1956. Despite the reminder letters sent to each shareholder, this amount remained unclaimed and hence was transferred.

FIXED DEPOSITS

The Company has not accepted any deposits from the Public during the year.

INDUSTRIAL RELATIONS

The Industrial relations continued to remain cordial during the period. The Board of Directors wishes to place on record their appreciation for co-operation extended by all sections of the employees.

INFORMATION PURSUANT TO SECTION 217 OF COMPANIES ACT, 1956

The information in accordance with clause (e) of sub-section 217 of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of the Board of Directors)Rules, 1988 and forming part of the Directors' Report for the year ended 31st March 2012 is given in Annexure of this report.

During the period under review, the Company had no employee covered under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

DIRECTORS

In accordance with the provisions of the companies Act, 1956, Sri Mahesh Agarwal Director of the Company will retire by rotation at the ensuing Annual General Meeting and being eligible, offer him selves for reappointment. The Director recommends his appointment. The details as required under clause 49 of the listing Agreement is attached.

Shri C. Thirumurthy was co-opted as an additional director with effect from 13,h February, 2012. He vacates of office at the ensuing annual general meeting and seeks reappointment.

Shri SB Sekar resigned from the office of Director of the Company with effect from 17 th May 2012 and the board places on record and appreciates his service rendered during his tenure.

DIRECTORS' RESPONSIBILITY STATEMENTS

In term of the provisions of Sec.217(2AA) of the Companies Act, 1956 your Directors confirm

a) that in the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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

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

d) that your Directors had prepared the annual accounts on a going concern basis.

AUDITORS

Your Company's Auditors M/s. VKS Aiyer & Co., Chartered Accountants, Coimbatore will retire at the ensuing Annual General Meeting and they are eligible for re-appointment.

COST AUDITOR

The Company has re-appointed M.Nagarajan & Co., Cost Accountant as the Cost Auditor of the Company for the year 2012-13 subject to the approval of the Central Government.

CORPORATE GOVERNANCE:

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

The requisite Certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49 is attached to this Report.

LISTING

The equity shares of the Company are listed and traded in the Stock Exchanges of Coimbatore, Chennai, Ahmadabad and Calcutta and the Company has paid the annual listing fees to Stock Exchanges for the financial year 2011-12. The Equity Shares of the Company are permitted for trading in BSE Indonext segment - under group "S" of Bombay Stock Exchange Limited.

The NSE has admitted the Securities of our Company for dealings on the National Stock Exchange (Capital Market Segment) with effect from 9th August, 2010.

Members have option to hold their shares in dematerialized form through the National Securities Depositary Limited (NSDL) and Central Depositary Services (India) Limited (CDSL).The ISIN of the Company is INE498E01010.

ACKNOWLEDGEMENT

The Directors wish to place on record their gratitude to State Bank of India,Union Bank of India, Oriental Bank of Commerce and The Catholic Syrian Bank Limited for their financial assistance. Your Directors also take this opportunity to express their appreciation of the co-operation extended by the employees. Shareholder's appreciation of the managements's efforts expressed at the general meetings of the Company and otherwise, is a great fillip to strive for better performance year after year.

The Board dedicates its prayers to invoke the blessing of Lord Vishnu, Goddess Lakshmi, Lord Shiva and Goddess Shakthi for the continued prosperity of the Company.

FOR AND ON BEHALF OF THE BOARD (Sd)

Place: COIMBATORE SHYAMLAL AGARWALA

Date : 29th June 2012 Chairman


Mar 31, 2010

The Directors have great pleasure in presenting their SIXTEENTH Annual Report together with the audited financial statements of the Company for the year ended 31st March 2010.

Working Results Rs. in Lacs

Details 31st March 2010 31st March 2009 INCOME

Sales and Other Operating Receipts: 5528.99 4993.90

Other Income 15.58 14.39

Total 5544.57 5008.29

Gross profit before interest, depreciation and tax 994.03 808.10

Less: Interest 284.56 259.47

Profit after interest, but before depreciation and tax 709.17 548.63

Less: Depreciation 447.14 436.07

Add: Prior Year Adjustments 0.00 0.02

PROFIT BEFORE TAX 262.03 112.58

Less: Provision for Income Tax - Current Tax 45.99 12.88

- Current Year FBT 0.00 1.43

- Prior Year Income Tax 0.00 1.87

- Prior Year FBT 0.00 0.61

Less: Deferred Tax Liability 0.00 83.07

Add: Deferred Tax Liability Reversed 9.70 0.00

NET PROFIT AFTER TAX 225.74 12.72

Add: Opening Surplus 670.58 657.86

Total profit available for appropriation 896.32 670.58

APPROPRIATION

The above Profit is proposed to be appropr iated as stated below:-

Proposed Dividends & Tax on Dividend 61.36 0.00

Surplus Carried over to Balance Sheet 834.96 670.58

896.32 670.58

DIVIDEND

Your Directors are pleased to recommend a dividend of 10% for the year ended 31st March 2010 the total outgo in the form of dividend including corporate dividend tax will be to the extent of Rs. 61.36 Lacs.

REVIEW OF OPERATIONS

During the financial year under review, Sales have increased from Rs.4877.81 Lacs to Rs. 5485.56 Lacs. Even though there was Power Cut and frequent power interruptions during this year, on account of the better utilization; the yarn production increased to 36.81 Lacs Kgs. as against 35.22 Lacs Kgs. in last year. The mill has produced Knitted fabrics of 19.59 Lacs Kgs. as against 17.34 Lacs Kgs. in last year.

During the year under review, the company installed three more Wind Electric Generators to the total capacity of 2.20 MW. The windmills generated 55.73 Lacs units of wind electricity as against 47.58 Lacs units in the previous period. The Wind electricity was captively consumed by use in the Textile Mill.

OUTLOOK FOR THE IMMEDIATE FUTURE

The Company continued to pursue the policy of constant modernization by upgrading the textile machines, to improve quality and quantity. The company plans to increase spindle capacity from 21744 to 24336 Spindles. Your directors are optimistic of continued good performance in the immediate future, subject to availability of good quality cotton at a reasonable price and uninterrupted power.

FINANCES

During the year under review, the Company has forfeited 88700 numbers of shares. The paid up Share Capital of the company stood at Rs. 526.24 Lacs. The Reserves and Surplus, representing the credit balance in the Profit and Loss Account stood at Rs.834.96 Lacs. The liability for interest free sales tax deferred credit stood at Rs.531.21 Lacs. (Rs.584.46 Lacs) The Company met all financial commitments to the Bankers on account of Term Loan and Working Capital Credit. On account of economic recession during last year in Global Market, which severely affected the Textile Industry; the company has got sanction from the Bankers for moratorium period of two years for Term Loan repayment.

DEPOSITS

The Company has not accepted any deposits from the Public at any time during the year.

PERSONNEL

The Industrial relations continued to remain cordial during the period. The Board of Directors wishes to place on record their appreciation for co-operation extended by all sections of the employees.

INFORMATION PURSUANT TO SECTION 217 OF COMPANIES ACT, 1956

The information required as per Section 217(l)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 is furnished in the Annexure.

During the period under review, the Company had no employee covered under Section 217(2A) ot the Companies Act, 1956.

DmECTORS

Shri Mahesh Agarwal and Shri SP. Sekar, the Directors longest in Office, retire by rotation at the ensuing Annual General Meeting, being eligible, offer themselves for reappointment.

Shri Kanhaiyalal Sharma resigned the Directorship in the Company with effect from 7th December 2009 due to his personal reasons. The Board wish to place on record their appreciation for the services rendered by Shri Kanhaiyalal Sharma, during his tenure of his office as Director in the Company.

The tenure of office of Shri Shyamlal Agarwala, as Managing Director, expired on 31st March 2010. The Board of Directors, at their meeting held on 3rd March 2010, re-appointed Shri Shyamlal Agarwala, for a further period of five years, on enhanced remuneration, The re-appointment of terms of remuneration are subject to approval of shareholders, for which a special business is included in the notice convening the 16th Annual General Meeting of the Company.

The Board of Directors also approved at their meeting held on 3rd March 2010, payment of enhanced remuneration to Shri Manoj Kumar Jhajharia, with effect from 1st April 2010. Necessary resolution is placed before the shareholders for their approval, as a special business, in the ensuing Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENTS

In term of Sec.217(2AA) of the Companies Act, 1956 your Directors state that :-

i) In the preparation of the annual accounts, all the applicable accounting standards prevailing in India were followed and recognised.

ii) The Directors had selected appopriate accounting Policies and applied them consistently and also 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 31st March 2010 and of the Profits of the Company for the period ended on that date;

iii) The Directors had 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; and

iv) The Directors had prepared the annual accounts on a going concern basis.

AUDITORS

The present Auditors M/s. VKS Aiyer & Coy., Chartered Accountants, Coimbatore, retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

LISTING WITH STOCK EXCHANGES

The equity shares of the Company are listed and traded in the stock exchanges of Coimbatore, Chennai, Ahmedabad and Calcutta and the company has made compliance with the conditions of listing agreements.

The Equity Shares of the Company are permitted for trading in BSE Indonext segment - under group "S" of Bombay Stock Exchange Limited.

ACKNOWLEDGEMENT

The Directors wish to place on record their gratitude to State Bank of India ,Union Bank of India, Oriental Bank of Commerce and The Catholic Syrian Bank Limited for their financial assistance. Your Directors also take this opportunity to express their appreciation of the earnest efforts put in by the employees, at all levels, in achieving the corporate objectives. Shareholders appreciation of the managementss efforts expressed at the general meetings of the Company and otherwise, is a great fillip to strive for better performance year after year.

The Board dedicates its prayers to invoke the blessing of Lord Vishnu, Goddess Lakshmi, Lord Shiva and Goddess Shakthi for the continued prosperity of the Company.

BY ORDER OF THE BOARD

(Sd)..

Place: COIMBATORE SHYAMLAL AGARWALA

Date : 28.05.2010 Chairman