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Directors Report of Soma Textiles & Industries Ltd.

Mar 31, 2016

To

The Members,

The Directors have pleasure in presenting their Seventy-eighth (78th) Annual Report of the Company, together with the audited financial statements for the financial year ended 31st March, 2016.

1. FINANCIAL PERFORMANCE

There was no improvement in the business scenario of the Textile Industry and is continued to remain challenging.

The revenue from operations for the year 2015-16 was Rs.17,024 lacs as compared to Rs.22,554 lacs in previous year, a decline by 24.52%.

The loss before Prior period, Exceptional item and tax was Rs.2,347 lacs against the previous year loss of Rs.4,764 lacs. The net loss for the year was Rs.1,423 lacs against the previous year net loss of Rs.3,358 lacs.

2. DIVIDEND

The Board of Directors of your Company have not recommended any dividend for the Financial Year ended 31st March, 2016, considering the loss during the year and brought forward losses.

3. COTTON

India''s cotton production in the current season 2015-2016 is likely to be 341 lac bales. Decline in domestic yarn production, an unlikely recovery in cotton exports will keep domestic cotton prices under pressure; however quality of output has declined.

4. EXPORT

Your Company''s export performance in the year under review has decreased from the last year mainly on account of reduction in the denim fabric export due to cut throat competition. The FOB value of the exports during the Year under review was Rs.1,956 lacs against Rs.4,842 lacs in the previous year.

5. ANALYSIS AND REVIEW

Indian Textiles industry is one of the leading sectors of the Indian economy and contributes significantly to the country''s industrial output as well as on employment generation and brings valuable foreign exchange by exporting Textile fabrics, yarns and Garments.

6. OPPORTUNITIES AND CHALLENGES

India''s textile sector is aided by several key advantages, in terms of availability of adequate raw material, entrepreneurial skills, large domestic market, presence of supporting industries and supporting policy initiatives from the government. The Government has introduced the Amended Technology Up gradation Fund Scheme (ATUFS) to give a further boost for technology investment in the textile industry.

The major challenge that the textile industry is facing is rising production costs, arising out of rising wages, power and interest costs. Currently the Indian Denim Industry is going through sluggish phase due to exponential capacity expansion which has created a huge oversupply situation.

7. EXPANSION AND MODERNISATION

In view of financial constraint company did not go for modernization, though minor balancing equipments were installed costing Rs.80 lacs.

8. CONSOLIDATED FINANCIAL STATEMENT

The Consolidated Audited Financial Statements prepared in accordance with the requirements under Accounting Standard AS-21 on “Consolidated Financial Statements” read with AS-23 on the “Accounting for Investment in Associates” read with the provisions of Companies Act, 2013 and the SEBI (LODR) Regulations, 2015, are provided in the Annual Report.

9. CASH FLOW STATEMENT

The Cash Flow Statement for the year ended 31st March, 2016 prepared in accordance with the applicable Accounting Standard, is annexed to the financial statement and statement of profit and loss as required under Regulation 34 of the SEBI (LODR) Regulations, 2015.

10. INSURANCE

Your Company has adequately insured its properties including its Buildings, Plant & Machinery and Stocks among others against fire, flood, earthquake, explosive and other such risks as considered necessary.

11. INTERNAL CONTROL

Your Company has in place adequate internal control systems covering all financial and operating functions commensurate with the size, nature and complexity of operations and are designed to provide reasonable assurance with regard to effectiveness and efficiency of operations, safeguard for assets, internal control over financial reporting and compliance with applicable statute, laws and regulations.

Internal Audits are conducted by the Internal auditors and they directly report to the Audit Committee of the Board, thus ensuring the independence of the process. The Audit Committee oversees the functions of internal auditors and provides necessary oversight and directions to the internal audit functions and periodically reviews the findings and ensures corrective measures are taken. Besides, the Audit Committee keeps a watch on the effectiveness of internal control system and looks into all aspect of internal control system and procedure to further strength the internal control system and procedure.

The Audit Committee comprises the majority of Independent Directors in terms of the applicable provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

12. FIXED DEPOSITS

Your Company has not accepted any fixed deposit during the year from public falling within the meaning of Section 73 of the Companies Act, 2013, read with Companies (Acceptance of Deposit) Rules, 2014.

13. DIRECTORS AND KEY MANAGERIAL PERSONNEL Rotation

Shri S. B. Bhat, Director retires by rotation at the forthcoming Annual General Meeting, and being eligible, offers himself for re-appointment in accordance with the provisions of the Companies Act, 2013, and Articles of Association of the Company. The Board recommends his re-appointment.

The term of Shri A. K. Somany (“Shri Somany”) as Managing Director is due to expire on 21st January, 2017; the Board is seeking re-appointment of Shri Somany as Managing Director not liable to retire by rotation for a further period of 3 years with effect from 22nd January, 2017.

None of the Directors are disqualified from being appointed or holding office as Directors as stipulated under Section 164(2) of the Companies Act, 2013.

14. DECLARATION OF INDEPENDENT DIRECTORS

The Company has received necessary declaration from each Independent Directors under section 149(7) of the Companies Act, 2013, confirming that he/she meets the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and Listing Regulations, 2015.

15. CORPORATE SOCIAL RESPONSIBILITY

Your Company does not come within the purview of Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibilities Policy) Rules, 2014. Thus, Corporate Social Responsibility initiatives as required under the said act are not applicable to the Company.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The Company has not, given loans, made investments or given guarantees under the provisions of Section 186 of the Companies Act, 2013 during the year under review.

17. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTY

All contracts/arrangement/transactions entered by the Company with related parties during the financial year under review, were on arm''s length basis and were in ordinary course of business and therefore the provisions of Section 188 of the Companies Act, 2013 do not attract. Further the Company has not entered in to any contract/arrangement/ transactions with related parties which could be considered material in accordance with the Policy of the Company on Materiality of Related Party Transactions. In view thereof the disclosure of Related Party Transactions in Form AOC-2 as required under Section 134(3)(h) and Rule 8(2) of the Companies (Accounts) Rule, 2014, is not required,

The Policy on Materiality of Related Party Transactions and dealing with the related party transactions as approved by the Board has been uploaded on the Company''s website at the web link: www.somatextiles.com/home.php/investors/ policies and may be accessed on the Company''s website.

None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

18. LISTING ON STOCK EXCHANGES

The Equity Shares of the Company are listed at the following Stock Exchanges:-

(a) BSE Limited (BSE).

Address: Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001

(b) National Stock Exchange of India Limited (NSE).

Address: Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai-400051.

NOTE:

(i) Listing fees have been paid to the Stock Exchanges for the year 2014-15.

(ii) The Calcutta Stock Exchange Association Ltd. has vide its Letter No. CSEA/ID/223/2008 dated 16th April, 2008, confirmed the delisting of Company''s Shares from the official List of their exchange. However Equity Shares have been allowed to be traded under the “Permitted Category” on the Exchange considering the interest of General Investors in the Company.

Stock Code

(i) NSE - SOMATEX, (ii) BSE - 521034, (iii) CSE - 29067.

De-mat ISIN Number in NSDL & CDSL - ISIN - INE 314C01013.

19. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

The Auditors Report and Secretarial Auditors Report do not contain any reservation, qualification or adverse remark and therefore need no explanations or comments from the Board of Directors.

20. BOARD’S EVALUATION OF THE PERFORMANCE

In compliance with the Companies Act, 2013, and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of its own performance, and that of its Committees and individual Directors. The manner in which the evaluation has been carried out has been given in the Corporate Governance Report.

21. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

Four (4) Meetings of the Board were held during the year under review, the details of which are given in the Report on Corporate Governance, forming part of this Report.

The intervening gap between the Two Meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

22. AUDIT COMMITTEE

The Audit Committee comprises of total four (4) members, namely Shri B. K. Hurkat, as Chairman and Shri S. K. Somany, Shri M. H. Shah and Ms. N. Loyalka as Members, in conformity with the requirements of section 134(3) and section 177(8) of the Companies Act, 2013, read with the provisions of SEBI (LODR) Regulations, 2015. Majority of its members are Non-executive Independent Directors.

Four (4) Meetings of the Audit Committee were held during the year under review, the details of which are given in the Report on Corporate Governance, forming part of this Report. The Board of Directors accepted all recommendations of the Audit Committee in the reporting period.

23. ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER MECHANISM

The Company has formulated a whistle Blower Policy to establish a Vigil Mechanism for Directors/ Employees and other Stakeholders of the Company to report concern about illegal or unethical behavior and practices, actual or suspected fraud or violation of the Company''s Code of Conduct. The Mechanism provides for adequate safeguards against victimization of Directors, employees and others who use such mechanism and makes provisions for direct excess to the Chairman of the Audit Committee. The details of the Whistle Blower Policy have been provided in the Corporate Governance Report forming part of this Report.

The Whistle Blower Policy is available on the website of the Company; www.somatextiles.com/home.php/investors/ policies.

24. REMUNERATION POLICY

The Board has, on recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes, independence of Directors and other matters as per section 178 and Clause 49(IV)(B) of Listing Agreement. The Nomination & Remuneration Policy is stated in the Corporate Governance Report. The Policy is also available on the website of the Company i.e. http://www.somatextiles.com.

25. CORPORATE GOVERNANCE

Your Company has complied with requirements under the Corporate Governance as stipulated in the revised Clause 49 of the Listing Agreement with the Stock Exchange(s).

A detailed reports on ‘Corporate Governance'' pursuant to revised Clause 49 of the Listing Agreement along with an Auditors'' Certificate on Compliance with the conditions of Corporate Governance, is annexed and forms part of the Annual Report.

26. CORPORATE GOVERNANCE - VOLUNTARY GUIDELINES 2009

The Ministry of Corporate Affairs, Government of India, had issued a set of Voluntary Guidelines 2009 on Corporate Governance in December, 2009, for voluntary adoption of a set of good practices by the Corporate Sector. These guidelines are expected to serve as a bench mark for the Corporate Sector and also help them in achieving the highest Standard of Corporate Governance. Guidelines are reviewed by the Management from time to time to ensure the adherence of the same voluntarily commensurate with the requirements, best suited to your Company gradually in phases.

27. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report under review, as stipulated under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, is presented by virtue of an Annexure, forming part of the Directors'' Report.

28. DIRECTORS’ RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, the Board of Directors of your Company to the best of their knowledge and belief and on the basis of information and explanation obtained from the operating management, hereby states and confirms: -

(a) that in the preparation of attached Annual Accounts for the Financial Year ended 31st March, 2016 the applicable Accounting Standards have been followed along with proper explanation relating to material departures, wherever, applicable;

(b) that they have selected the Accounting Policies described in notes to accounts, which have been consistently applied, except where otherwise stated 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 on 31st March, 2016 and of the loss of the Company for the year ended on that date;

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

(d) that they have prepared the attached Annual Accounts on a ‘going concern'' basis.

(e) that they had laid down internal financial controls to be followed by the Company and that such internal controls are adequate and were operating effectively.

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

29. AUDITORS

M/s Pipara & Company, Chartered Accountants, (ICAI Firm Registration No.107929W), Statutory Auditors of Company hold office till the conclusion of the ensuing Annual General Meeting and being eligible offer themselves re-appointment.

We have received a certificate from the Auditor confirming that they are eligible for re-appointment as Auditors of the Company under Sub-Section (1) of Section 139 of the Companies Act, 2013 and that they meet the criteria for appointment stipulated in section 141 of the said Act.

The Board recommends their re-appointment, as the Company''s Statutory Auditors on the recommendation of Audit Committee from the conclusion of the ensuing Annual General Meeting until the conclusion of next Annual General Meeting of the Company on such remuneration, as may be fixed by the Board of Directors of the Company.

30. SECRETARIAL AUDITOR

The Board of Directors of the Company have appointed M/s. Drolia & Company, Company Secretaries, Kolkata, having certificate of Practice No. 1362, as the Secretarial Auditor, to conduct Secretarial Audit for the year ended 31st March, 2016, in terms of the provisions of Section 204 of the Companies Act, 2013 and the Companies (appointment and Remuneration of Managerial Personnel) Rules, 2014.

31. MANAGERIAL REMUNERATION

Details of the ratio of the remuneration of each director to the median employee''s remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached to this Report.

32. SECRETARIAL AUDIT REPORT

The Report of the Secretarial Audit for the financial year ended 31st March, 2016, as given by the Secretarial Auditor in the prescribed form MR-3 is annexed as Annexure to this Report and forms an integral part of this Report.

The Report does not contain any qualification, reservation and adverse remark.

33. AUDITORS’ REPORT

There are no qualifications, reservation or adverse remark of the Auditor in their Auditors'' Report that may call for any clarifications/explanations.

The Notes on financial statement, referred to in the Auditors'' Report are self-explanatory and do not require any elucidation and comments thereof.

34. INDUSTRIAL RELATIONS

Industrial relations in your Company, during the year under review continued to be cordial and harmonious.

35. COST AUDITORS

Pursuant to Section 148 of the Companies Act, 2013, read with the Companies (Cost Records & Audit) Amendment Rules, 2014, the cost records maintained by the Company in respect of its products are required to be audited. Your Directors, on the recommendation of the Audit Committee, appointed M/s. N. D. Birla & Co., Cost Accountants, as Cost Auditors of the Company to conduct the Audit of the Cost Accounts in respect of manufacturing of Textile for the Financial Year ending 31st March, 2016 on a remuneration fixed by the Board and has recommended their remuneration to the Shareholders for their ratification, in the forthcoming Annual General Meeting. Accordingly, a resolution seeking Members'' ratification for payment of remuneration to M/s N. D. Birla & Co., Cost Accountants, is included in the Notice convening the Annual General Meeting.

36. DEPOSITORY SYSTEMS

The Company''s Shares are currently traded in dematerialized form, as per the SEBI directives and the Company has entered in to agreements with the following Depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), for trading in dematerialized form.

Members are therefore advised to avail of the services either of the depositories, to dematerialize their physical shares, if any held by them, for trading in Company''s shares smoothly and conveniently.

As on 31st March, 2016 32501013 Equity Shares are held in dematerialized form and represent 98.39% of the Company''s total paid up Capital.

37. SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE

The Company has in place as Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

No sexual harassment complaint was received during the year under review.

38. ACCOUNTS OF THE SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURES

The statement containing the silent features of the financial statement of the company''s associate companies under the first proviso to sub-section (3) of section 129 of Companies Act, 2013 is enclosed as AOC-1 in the Annexure.

39. PARTICULARS OF EMPLOYEES

During the year under report, none of the employees of the Company was in receipt of remuneration for any part of the year, in excess of the amount of remuneration prescribed under Section 197 of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended up to date.

The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration) Rules, 2014 is Annexed and forms a part of this Report.

40. EXTRACT OF ANNUAL RETURN

The extracts of Annual Return in form no. MGT-9 are attached in accordance with Section 134(3)(a), read with Section 92 of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014 and form part of this Report.

41. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in the business of manufacturing of Cotton Yarn, Denim Fabrics, Shirtings and Garments.

Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, required to be disclosed pursuant to Section 134(3)(m) of the Companies Act, 2013, read with rule 8(3) of the Companies (Accounts) Rules, 2014, as amended is given in the Annexure and forms part of this Report.

42. RISK MANAGEMENT

The Company has in place mechanism to inform Board Members about the Risk Assessment and Risk Minimization procedure which is periodically reviewed to ensure that risks and uncertainties are systematically identified, prioritized and initiated on constant basis.

The risk management procedure is reviewed by the Audit Committee from time to time to ensure that the executive management controls the risks and uncertainties through a proper defined framework and major risks, are properly and systematically addressed through mitigation actions on continuing basis.

43. CAUTIONARY STATEMENT

Statements in the Board''s Report and the Management Discussion & Analysis describing Company''s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Many factors may affect the actual results, which could be different from what the Directors'' envisage in terms of future performance and outlook.

44. ACKNOWLEDGEMENT

Your Directors thanks all the valued Customers, Suppliers, Shareholders, Business Associates, Financial Institutions, Bankers, Government Agencies and other Stakeholders, for their patronage and support and look forward to their continued support in future. We also thank the dedicated and committed team of employees of the Company for their contribution to the Company.

On behalf of the Board

Place : Ahmedabad (S. K. SOMANY)

Date : 27th May, 2016 Chairman


Mar 31, 2015

Dear Members,

The Directors are pleased to present their Seventy Seventh (77th) Annual Report of the Company, together with the audited financial statements for the financial year ended 31st March, 2015.

1. FINANCIAL PERFORMANCE

There was no improvement in the business scenario of the Textile Industry and is continued to remain challenging.

The revenue from operations for the year 2014-15 was Rs. 22,554 lacs as compared to Rs. 27,292 lacs in the previous year. The same is not strictly comparable due to the sale of Baramati Unit during the previous year.

The Financial position of the Company severely affected due to non availability of adequate working capital from the Banks as loans were classified by Banks as non performing assets as Company failed to pay interest and installments consecutively for more than 90 days. This also affected the top line growth of Company.

The loss before Prior period, Exceptional item and tax was Rs. 4,764 lacs against the previous year's loss of Rs. 2,945 lacs.

The net loss for the year was Rs. 3,358 lacs against the net loss of Rs. 1,334 lacs.

2. DIVIDEND

The Board of Directors of your Company do not recommend any dividend for the Financial Year ended March 31, 2015 due to the loss incurred during the year.

3. COTTON

India's cotton production in the current year 2014-2015 estimated as Rs. 380 lac is expected to be highest production in our country. Export of cotton is likely to come down as China, our biggest importer has decided to first consume its reserve stock as a result cotton prices remain reasonably steady.

4. EXPORT

Your Company's export performance in the year under review has improved from the last year mainly on account of denim fabric export. The FOB value of the exports during the Year was Rs. 4,842 lacs against Rs. 5,083 lacs in the previous year.

5. ANALYSIS AND REVIEW

The Indian Textiles industry remains one of the leading sector of the Indian economy in terms of employment and brings valuable foreign currency by exporting Textiles and Garments.

6. OPPORTUNITIES AND CHALLENGES

The government of India has in principle decided to further increase the production of fabrics and garments by way of value addition interest of depending mostly on cotton export. To bring about modernization and competitiveness the government is providing necessary infrastructure to achieve the above objective..

7. EXPANSION AND MODERNISATION

In view of financial constraints equipment valuing Rs. 64 lacs, was mostly spent on balancing production.

8. CASH FLOW STATEMENT

As required under Clause 32 of the Listing Agreement with the Stock Exchange(s), in India, a Cash Flow Statement, as prepared in accordance with the Accounting Standard on Cash Flow Statement (AS 3) issued by the Institute of Chartered Accountants of India (ICAI), is given along with Financial Statement and Statement of Profit and Loss.

9. INSURANCE

Your Company's, properties including its Buildings, Plant & Machinery and Stocks among others are adequately insured against fire, flood, earthquake, explosive and other such risks as considered necessary.

10. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company has a proper and adequate internal control procedure commensurate with its nature of business and the size of operations to ensure the timely and accurate recordings of financial transactions and adherence, to applicable Accounting Standards, optimum utilization & safety of assets, complying with applicable statutes and compliance with Corporate policy(ies). The Audit Committee periodically interacts with the Management, Internal Auditors and Statutory Auditors and tracks the implementation of corrective actions. The Audit Committee oversees the functions of internal auditor and reviews the audit plans, internal control and internal audit reports, submitted by the internal auditors, to examine and evaluate the adequate and effectiveness of the internal control system to further strengthen the internal control systems and procedures. Significant observations, emanating from the audit are acted upon. The Audit Committee of the Board of Directors comprises the majority of Independent Directors.

11. FIXED DEPOSITS

The Company has not accepted deposit from public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposit) Rules, 2014, during the year under report.

12. DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTMENT

Shri M. H. Shah and Smt. N. Loyalka are Non-Executive Directors, designated as Independent Director on the Board of Directors ('the Board') of the Company. With the enactment of the Companies Act, 2013 ('the Act'), it is now incumbent upon every listed company to have the requisite number of Independent Directors on the Board. Shri M. H. Shah has been appointed as an Additional Director, designated as Independent Director of the Company and Smt. Nisha Loyalka has been appointed as an Independent Director in casual vacancy, caused by death of Late Shri B. L. Dhoot, under the Act.

The Company has received two separate Notices in writing from Members along with requisite deposits of money proposing the aforesaid two directors to the office of Directors under the applicable provisions of the Act. The Board recommends the appointment of Shri M. H. Shah and Smt. N. Loyalka, as an Independent Directors of the Company, not liable to retire by rotation, to hold office for a term of five consecutive years with effect from their respective date of appointment.

Necessary resolutions for obtaining approval of the Members in respect of the above appointments have been incorporated in the notice of the forthcoming Annual General Meeting.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The terms and conditions of appointment of the Independent Directors are incorporated on the website of the Company at http:// www.somatextiles.com.

As per the requirement under the Listing Agreement, particulars of Directors seeking re-appointment at the ensuing

Annual General Meeting form part of the Notice of the Meeting.

With the enactment of the Companies Act, 2013 ('the Act'), it is now incumbent upon every listed company to have the requisite number of Key Managerial Personnel Shri M. B. Parakh, Deputy General Manager (Head of Finance), has been appointed as Chief Financial Officer (CFO), designated as Key Managerial Personnel by the Board of Directors at their Meeting held on 10th February, 2015, as prescribed under the Act with effect from 10.02.2015.

Cessation

The Company lost one of the guiding Member Late Shri B. L. Dhoot, on 31st October, 2014. He was a Director of the Company since 24th August, 2009. The Company appreciates the invaluable contribution, guidance and inspiration given by Late Shri Dhoot in directing the destiny of the Company.

Shri S. C. Mathur, resigned from the Board of the Company with effect from 9th February, 2015, upon withdrawal of his nomination by IDBI from the Board of Directors of the Company vide its letter no. CBG-SSCB.53/373/Nom.8 dated 5th February, 2015.

The Board recorded its appreciation for the services rendered by Late B. L. Dhoot, as a Non-executive Independent Director and Shri S. C. Mathur, as a Nominee Director on behalf of IDBI, during their association with the Company.

Rotation

Shri S. K. Somany, Director retires by rotation at the forthcoming Annual General Meeting, and being eligible, offers himself for re-appointment in accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company. The Board recommends his re-appointment.

None of the Directors are disqualified from being appointed or holding office as Directors as stipulated under Section 164(2) of the Companies Act, 2013.

13. DECLARATION OF INDEPENDENT DIRECTORS

The provisions of Section 149 pertaining to the appointment of Independent Directors apply to our Company. The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013, so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

14. CORPORATE SOCIAL RESPONSIBILITY

The Company does not fall within the ambit of Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibilities Policy) Rules, 2014. Hence, Corporate Social Responsibility initiatives as required under the said act is not applicable.

15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable.

16. RELATED PARTY TRANSACTIONS

All related party transactions were entered on arm's length basis and were in the ordinary course of business in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Agreement. During the year under review, the Company has not entered into any contract or arrangement or transaction with related parties, which could be considered material in accordance with the policy of the Company on related party transactions. Accordingly no transactions are being reported in Form No. AOC-2 in terms of section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014.

Related Party Transactions Policy as approved by the Board has been uploaded on the Company's website at the web link: www.somatextiles.com/home.php/investors/policies.

None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

17. LISTING ON STOCK EXCHANGES

The Equity Shares of the Company are listed at the following Stock Exchanges:-

(a) BSE Limited (BSE).

Address: Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001

(b) National Stock Exchange of India Limited (NSE).

Address: Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai-400051.

NOTE:

(i) Listing fees have been paid to the Stock Exchanges for the year 2013-14.

(ii) The Calcutta Stock Exchange Association Ltd. has vide its Letter No. CSEA/ID/223/2008 dated 16th April, 2008, confirmed the delisting of Company's Shares from the official List of their exchange. However Equity Shares have been allowed to be traded under the "Permitted Category" on the Exchange considering the interest of General Investors in the Company.

Stock Code

(i) NSE - SOMATEX, (ii) BSE - 521034, (iii) CSE - 29067.

De-mat ISIN Number in NSDL & CDSL - ISIN - INE 314C01013.

18. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

There were no qualifications, reservations or adverse remarks made in the Auditors Report and Secretarial Auditors Report.

19. BOARD'S EVALUATION OF THE PERFORMANCE

In compliance with the Companies Act, 2013, and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the executive and non-executive Directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholders Relationship Committee.

The manner in which the evaluation has been carried out has been given in the Corporate Governance Report.

20. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

During the financial year under review four (4) Board Meetings were convened and held. Details of which are given in the Corporate Governance Report, forming part of this Report.

The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and revised Clause 49(II)(D)(1) of the Listing Agreement.

21. AUDIT COMMITTEE

Pursuant to section 134(3) and section 177(8) of the Companies Act, 2013 the Audit Committee comprises of total four (4) members, namely Shri B. K. Hurkat, as Chairman and Shri S. K. Somany, Shri M. H. Shah and Smt. N. Loyalka as Members. Majority of its members are Non-executive Independent Directors.

During the reporting period under review four (4) Audit Committee Meetings have been convened and held. Details are given in the Corporate Governance Report, forming part of this Report. The Board of Directors accepted all recommendations of the Audit Committee in the reporting period.

22. VIGIL MECHANISM / WHISTLE BLOWER MECHANISM

The Company has established a vigil mechanism, as required under section 177(9) of the Companies Act, 2013 and Clause 49(II)(F), for directors and employees to report genuine concerns about unethical behavior, actual or suspected fraud or violation of the company's code of conduct or ethics policy. The Policy of such mechanism has been circulated to all employees within the Company, which provides a framework to the employees for guide & proper utilization of the mechanism. The Whistle Blower Policy has been published on the Company's website http:// www.somatextiles.com.

The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of company's employees and the Company. More details about the Whistle Blower Policy (Vigil Mechanism) has been provided in the Corporate Governance Report, forming part of this Report.

The details of the policy have been posted on the website of the Company.

23. REMUNERATION POLICY

The Board has, on recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes, independence of Directors and other matters as per section 178 and Clause 49(IV)(B) of Listing Agreement. The Nomination & Remuneration Policy is stated in the Corporate Governance Report. The Policy is also available on the website of the Company i.e. http://www.somatextiles.com.

24. CORPORATE GOVERNANCE

Your Company has complied with requirements under the Corporate Governance as stipulated in the revised Clause 49 of the Listing Agreement with the Stock Exchange(s).

A detailed reports on 'Corporate Governance'pursuant to revised Clause 49 of the Listing Agreement along with an Auditors' Certificate on Compliance with the conditions of Corporate Governance, is annexed and forms part of the Annual Report.

25. CORPORATE GOVERNANCE - VOLUNT ARY GUIDELINES 2009

The Ministry of Corporate Affairs, Government of India, has issued a set of Voluntary Guidelines 2009, for voluntary adoption of a set of good practices by the Corporate Sector in addition to the existing laws for further improvement of Corporate Standards and practices. These guidelines are recommendatory in nature and are expected to serve as a bench mark for the Corporate Sector and help them in achieving the highest Standard of Corporate Governance. These guidelines are reviewed by the Management from time to time to ensure the adherence of the same voluntarily commensurate with the requirements, best suited to your Company gradually in phases.

26. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report under review, as stipulated under revised Clause 49 of the Listing Agreement with the Stock Exchange(s), is presented by virtue of an Annexure, forming part of the Directors' Report.

27. DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, the Board of Directors of your Company to the best of their knowledge and belief and on the basis of information and explanation obtained from the operating management, hereby states and confirms: -

(a) that in the preparation of attached Annual Accounts for the Financial Year ended 31st March, 2015 the applicable Accounting Standards have been followed along with proper explanation relating to material departures, wherever, applicable;

(b) that they have selected the Accounting Policies described in notes to accounts, which have been consistently applied, except where otherwise stated 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 on 31st March, 2015 and of the loss of the Company for the year ended on that date;

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

(d) that they have prepared the attached Annual Accounts on a 'going concern'basis;

(e) that they had laid down internal financial controls to be followed by the Company and that such internal controls are adequate and were operating effectively; and

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

28. AUDITORS

M/s Pipara & Company, Chartered Accountants, (ICAI Firm Registration No.107929W), are holding office as the Statutory Auditors of Company up to the conclusion of the ensuing Annual General Meeting and they are eligible for re-appointment.

In terms of Clause 41(1)(g) of the Listing Agreement the Statutory Auditors are subjected to the Pear Review Process of the Institute of Chartered Accountants of India (ICAI) and to hold a valid certificate issued by "Pear Review of the Board" of ICAI and our Statutory Auditors hold a valid certificate by the Pear Review Board of ICAI.

A written consent and a certificate from them has been received to the effect that their re-appointment, if made, would be in accordance with the conditions as may be prescribed under Sub-Section (1) of Section 139 of the Companies Act, 2013 and that they are satisfying the criteria provided in section 141 of the said Act.

The Board proposes the re-appointment of M/s Pipara & Company, Chartered Accountants, as Statutory Auditors of your Company based on the recommendation of Audit Committee to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of next Annual General Meeting.

29. SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made thereunder M/s. Drolia & Company, Company Secretaries, Kolkata, having certificate of Practice No. 1362, has been appointed as the Secretarial Auditor, to conduct a Secretarial Audit of the Company's Secretarial and related records for the year ended 31st March, 2015.

30. MANAGERIAL REMUNERATION

Details of the ratio of the remuneration of each director to the median employee's remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached to this Report.

31. SECRETARIAL AUDIT REPORT

Details forming part of Secretarial Audit Report in Form MR-3 is given in the Annexure and forms part of this Report for financial year 2014-15. There are no reservations, qualification, adverse remark or disclaimer contained in the Secretarial Audit Report.

32. AUDITORS' REPORT

Notes on accounts, forming part of the Audited Accounts are self-explanatory and do not call for any further comments. There are no qualifications or adverse remarks in the Auditors' Report which require any clarifications/explanations thereof.

33. INDUSTRIAL RELATIONS

Industrial relations, during the year under review continued to remain cordial and harmonious.

34. COST AUDITORS

Pursuant to Section 148 of the Companies Act, 2013, read with the Companies (Cost Records & Audit) Amendment Rules, 2014, the cost records maintained by the Company in respect of its products are required to be audited. Your Directors, on the recommendation of the Audit Committee, appointed M/s. N. D. Birla & Co., Cost Accountants, as Cost Auditors of the Company to conduct the Audit of the Cost Accounts in respect of manufacturing of Textile for the Financial Year ending 31st March, 2015 on a remuneration fixed by the Board and has recommended their remuneration to the Shareholders for their ratification, in the forthcoming Annual General Meeting. Accordingly, a resolution seeking Members' ratification for payment of remuneration to M/s N. D. Birla & Co., Cost Accountants, is included in the Notice convening the Annual General Meeting.

The Company has e-filed the Cost Audit Report for the financial year ended 31st March, 2014 vide SRN. S31325384 on 23rd September, 2014, with Ministry of Corporate Affairs (Cost Audit Branch), New Delhi.

35. DEPOSITORY SYSTEMS

As the Members are aware that the Company's Shares are compulsory traded in dematerialized form. The Company has arrangements with both the Depositories National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), to establish electronic connectivity of its Shares, for trading in dematerialised form.

As on 31st March, 2015, 98.38% of the Company's total paid up Capital representing 32,497,249 Equity Shares are in dematerialized form.

In view of the numerous advantages offered by the Depository System, Members holding Shares in Physical mode are advised to avail of the facility of dematerialization from either of the depositories.

36. PARTICULARS OF EMPLOYEES

During the year under report, none of the employees of the Company was in receipt of remuneration for any part of the year, in excess of the amount of remuneration prescribed under Section 197 of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended upto date.

The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration) Rules, 2014 is Annexed and forms a part of this Report.

37. EXTRACT OF ANNUAL RETURN

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, in From No. MGT-9 are attached and forms part of this Report.

38. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in the business of manufacturing of Cotton Yarn, Denim Fabrics, Shirtings and Garments.

Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, required to be disclosed pursuant to Section 134(3)(m) of the Companies Act, 2013, read with rule 8(3) of the Companies (Accounts) Rules, 2014, as amended is given in the Annexure and forms part of this Report.

39. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

Risk Management includes identifying types of risks and its assessment, risk handling, monitoring and reporting. The Company has adopted the measures concerning the development and implementation of a Risk Management Policy after identifying the elements of risks which in the opinion of the Board may threaten the very existence of the Company itself.

The Company has framed a policy and process to help identify, assess and manage risks, pursuant to section 134(3)(n) of the Companies Act, 2013 and clause 49(VI) of the listing agreement. The policy and process has been in place throughout the reporting period.

40. CAUTIONARY STATEMENT

Statements in the Board's Report and the Management Discussion & Analysis describing Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Many factors may affect the actual results, which could be different from what the Directors' envisage in terms of future performance and outlook.

41. ACKNOWLEDGEMENT

Your Directors thanks all the valued Customers, Suppliers, Shareholders, Business Associates, Financial Institutions, Bankers, Government Agencies and other Stakeholders, for their patronage and support and look forward to their continued support in future. They also thank the dedicated and committed team of employees of the Company for their contribution to the Company.

On behalf of the Board

Place : Ahmedabad (S. K. SOMANY) Date : 30th May, 2015 Chairman


Mar 31, 2014

The Members,

The Directors have pleasure in presenting their 76th Annual Report of the Company, together with the audited accounts for the Financial Year ended 31st March, 2014.

1. FINANCIAL PERFORMANCE

During the Financial Year under review the business scenario for the Textile Industry was extremely challenging.

The revenue from operations for the year 2013-14 was Rs. 27,292 lacs as compared to Rs. 32,271 lacs in previous year, a decline by 15.43%.

The loss before Prior period, Exceptional item and tax was Rs. 2945 lacs against the previous year loss of Rs. 419 lacs.

The net loss for the year was Rs. 1334 lacs against the previous year net loss of Rs. 166 lacs.

2. DIVIDEND

The Board of Directors of your Company do not recommended any dividend on the paid up Equity Share Capital of the Company for the Financial Year under review considering the brought forward losses and loss during the year.

3. COTTON

India''s cotton production in the current season 2013-2014 is likely to be 382 lacs bales out of which expected exports will be about 112 lacs bales. Availability of good quality fibre is restricted. There is lot of uncertainty about price due to varying estimates about weather conditions and un-certainty about cotton policies in China. There is optimism that because of good quality of Indian yarn export will continue and may grow.

4. EXPORT

Your Company''s export performance in the year under review has improved from the last year mainly on account of denim fabric export. The FOB value of the exports during the Financial Year was Rs. 5083 lacs against Rs. 3,613 lacs in the previous year.

5. ANALYSIS AND REVIEW

Indian Textiles industry is one of the leading sectors of the Indian economy and contributes significantly to the country''s industrial output (14%). It employs 35 million people in direct employment and another 20 million in indirect employment, and earns much needed foreign currency with 17% of India''s exports coming from Textiles and Garments. Overall, it contributes 4% to India''s GDP.

6. OPPORTUNITIES AND CHALLENGES

Textile industry is one of the largest employers in India and has strong linkages with the rural economy. The growing young middle-class population is a source of great potential and provides immense opportunities to spur growth in the industry going forward.The major challenge that the textile and apparel industry is facing is rising production costs, arising out of rising wages, power and interest costs.

7. EXPANSION AND MODERNISATION

During the year under review the Company has completed the Denim expansion.

8. WITHDRAWL OF RIGHTS ISSUE

As you are aware that the Company had approved rights issue of equity shares to meet the requirements of CDR sanction with regard to infusion of Rs. 9.75 crores as equity capital by promoters. However, considering the prevailing market conditions, regulatory constraints and the current market quotation of our company''s shares besides the fact that the promoters have already brought in the required funds to meet the CDR stipulation, the Company has approached to CDR Empowered Group (CDREG) to consider issue of Redeemable Preference Shares of an aggregate value of Rs. 9.75 crores to the promoters of the company and their group companies instead of making "Rights Issue" to shareholders. The approval has since received by the Company from CDR Empowered Group (CDREG) vide its letter no. CDR/(SSA)/No.183/2013-14 dated 3rd June, 2013, for issuance of 0.01% Cumulative Redeemable Non- convertible Preference Shares in lieu of the "Rights Issue" of Equity Shares to the Promoters & Promoters Group Companies , for funding the cost of Capital Debt Restructuring (CDR) Package as stipulated by CDR-Cell, while sanctioned the CDR Package vide its Letter of Approval (LOA) No. BY-CDR(AG) No. 1110/2008-2009 dated 26th February, 2009, the Company resolved to issue the said Preference Shares to the promoters and promoters group companies, subject to Shareholders approval which was subsequently obtained at the last Annual General Meeting held on 9th September, 2013.

Your Directors therefore, withdraw and revoke the Special Resolutions so passed by Members of the Company for Issue of Equity Shares on Right Basis, at an EOGM held on 7th December, 2009.

8a ISSUE OF PREFERENCE SHARES

During the year under review, the Company had issued and allotted 975,000 – 0.01% Cumulative Redeemable Non-convertible Preference Shares of Rs.100/- each to the Promoters & Promoter Group Companies, in terms of Letter of Approval No. BY-CDR/(SSA)/No.183/2013-14 dated 3rd June, 2013, received from Capital Debt Restructuring (Empowered Group), in exercise of the authority and power conferred upon the Board by the Members of the Company by a Special Resolution passed at the Annual General Meeting held on 9th September, 2013.

9. SALE OF BARAMATI UNIT

As reported in our last year report that the Company has signed the Business Transfer Agreement (BTA) on 1st April, 2013, with Messrs GTN Engineering (India) Ltd., a Public Limited Company situated in Hyderabad in the State of Andhra Pradesh, for sale of its cotton spinning Unit at Baramati in Pune in the state of Maharashtra, at a lump-sum consideration of Rs.29.80 Crore,of which sum of Rs. 24.75 crores paid to term lenders to reduce the term debt and the balance amount was used towards Gap funding of its modified capital expenditure and other envisaged dues.

Your Company since obtained all the required permissions from the concerned Authorities/Departments, has handed over the physical possessions of its Baramati Unit to M/s. GTN (Energy (India) Ltd.) on 9th June, the closing date, as per the terms of BTA, signed by both the parties and paid dues to its lenders and also made payments of other dues, as per the commitment.

10. CASH FLOW STATEMENT

As required under Clause 32 of the Listing Agreement with the Stock Exchange(s), in India, a Cash Flow Statement, as prepared in accordance with the Accounting Standard on Cash Flow Statement (AS 3) issued by the Institute of Chartered Accountants of India (ICAI), is given along with Balance Sheet and Statement of Profit and Loss.

11. INSURANCE

Your Company''s, properties including its Buildings, Plant & Machinery and Stocks among others are adequately insured against fire, flood, earthquake, explosive and other such risks as considered necessary.

12. INTERNAL CONTROL SYSTEMS

Your Company has a proper and adequate internal control procedure commensurate with its nature of business and the size of operations to ensure the timely and accurate recordings of financial transactions and adherence, to applicable Accounting Standards, optimum utilization & safety of assets, complying with applicable statutes and compliance with Corporate policy(ies). The Audit Committee periodically interacts with the Management, Internal

Auditors and Statutory Auditors and tracks the implementation of corrective actions. The Audit Committee oversees the functions of internal auditor and reviews the audit plans, internal control and internal audit reports, submitted by the internal auditors, to examine and evaluate the adequate and effectiveness of the internal control system to further strengthen the internal control systems and procedures. Significant observations, emanating from the audit are acted upon. The Audit Committee of the Board of Directors comprises the majority of Independent Directors.

13. FIXED DEPOSITS

Your Company has not invited or accepted any fixed deposits from Public under the provisions of Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposit) Rules, 1975, during the year under report and as such no amount of principal or interest was outstanding on the date of Balance Sheet.

14. DIRECTORS

Appointment

Shri Sunil Chandra Mathur, has been nominated by IDBI Bank Ltd. as its Nominee Director on the Board of the Company effective from 26th March, 2014 in place of Shri Anoop Sharma, IDBI''s existing nominee on the Board of the Company.

Shri B. K. Hurkat and Shri B. L. Dhoot are Non-Executive Directors on the Board of Directors (''the Board'') of the Company. With the enactment of the Companies Act, 2013 (''the Act''), it is now incumbent upon every listed company to have the requisite number of Independent Directors on the Board. The above Directors are being appointed as Independent Directors of the Company under the Act. The Company has received two separate Notices in writing from a Member alongwith requisite deposits of money proposing the aforesaid two directors to the office of Directors under the applicable provisions of the Act. The Board recommends the appointment of Shri B. K. Hurkat and Shri B. L. Dhoot as Independent Directors of the Company, not liable to retire by rotation, to hold office for a term of five consecutive years from the conclusion of Seventy-sixth Annual General Meeting to the conclusion of Eighty-first Anuual General Meeting i.e. from the date of this Annual General Meeting upto 28th August, 2019.

Necessary resolutions for obtaining approval of the Members in respect of the above appointments have been incorporated in the notice of the forthcoming Annual General Meeting.

Cessation

IDBI Bank Ltd. (IDBI) has withdrawn Shri Anoop Sharma, as its Nominee Director from the Board of Directors of the Company with effect from 26th March, 2014 by simultaneously appointing Shri Sunil Chandra Mathur as its nominee on the Board of the Company.

The Board recorded its appreciation for the services rendered by Shri Anoop Sharma during his association with the Company, as a nominee Director on the Board for and on behalf of IDBI.

Rotation

Shri Shrikant Bhat, Director and the Executive Director of the Company retires at the forthcoming Annual General Meeting, and being eligible, offers himself for re-appointment. The Board recommends the re-appointment of Shri Shrikant Bhat at the ensuing AGM.

A brief profile of Shri Bhat has been provided in the notice of AGM.

None of the Directors are disqualified from being appointed or holding office as Directors as stipulated under Section 274(1)(g) of the Companies Act, 1956.

15. CORPORATE GOVERNANCE

Your Company has complied with the requirements under the Corporate Governance reporting system as stipulated in Clause 49 of the Listing Agreement.

A detailed reports on ''Corporate Governance'' pursuant to Clause 49 of the Listing Agreement along with an Auditors'' Certificate on Compliance with the conditions of Corporate Governance, is annexed to this report, forming part of the Annual Report.

16. CORPORATE GOVERNANCE – VOLUNTARY GUIDELINES 2009

The Ministry of Corporate Affairs, Government of India, has issued a set of Voluntary Guidelines 2009, for voluntary adoption of a set of good practices by the Corporate Sector in addition to the existing laws for further improvement of Corporate Standards and practices. These guidelines are recommendatory in nature and are expected to serve as a bench mark for the Corporate Sector and help them in achieving the highest Standard of Corporate Governance. These guidelines are reviewed by the Management from time to time to ensure the adherence of the same voluntarily commensurate with the requirements, best suited to your Company gradually in phases.

17. MANAGEMENT DISCUSSION AND ANALYSIS

As required by Clause 49 of the Listing Agreement, the Management Discussion and Analysis Report is annexed and forms part of the Directors'' Report.

18. DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, the Board of Directors of your Company to the best of their knowledge and belief and on the basis of information and explanation obtained from the operating management, hereby states and confirms: –

(i) that in the preparation of attached Annual Accounts for the Financial Year ended 31st March, 2014 the applicable Accounting Standards have been followed along with proper explanation relating to material departures, wherever, applicable;

(ii) that they have selected the Accounting Policies described in notes to accounts, which have been consistently applied, except where otherwise stated 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 on 31st March, 2014 and of the loss of the Company for the year ended on that date,

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

(iv) that they have prepared the attached Annual Accounts on a ''going concern'' basis.

19. AUDITORS

M/s Pipara & Company, Chartered Accountants, (ICAI Firm Registration No.107929W), who are the Statutory Auditors of Company holds office up to the conclusion of the ensuing Annual General Meeting and they are eligible for re- appointment.

In terms of Clause 41(1)(g) of the Listing Agreement the Statutory Auditors are subjected to the Pear Review Process of the Institute of Chartered Accountants of India (ICAI) and to hold a valid certificate issued by "Pear Review of the Board" of ICAI and our Statutory Auditors hold a valid certificate by the Pear Review Board of ICAI.

A Certificate from them has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Sub-Section (1B) of Section 224 of the Companies Act, 1956 and that they are not disqualified for re-appointment within the meaning of Section 226 of the said Act.

The Board proposes the re-appointment of M/s Pipara & Company, Chartered Accountants, as Statutory Auditors of your Company based on the recommendation of Audit Committee to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of next Annual General Meeting.

20. AUDITORS'' REPORT

Notes on accounts, forming part of the Audited Accounts are self-explanatory and do not call for any further comments. There are no qualifications or adverse remarks in the Auditors'' Report which require any clarifications/explanations thereof.

21. INDUSTRIAL RELATIONS

Industrial relations, through-out the year under review were cordial and harmonious.

22. COST AUDITORS

In terms of the provisions of Section 233(B) of the Companies Act, 1956 the Board has appointed a firm of Cost Accountants, M/s. N. D. Birla & Co., as Cost Auditors of the Company to conduct the Audit of the Cost Accounts in respect of manufacturing of Textile for the Financial Year ending 31st March, 2014 subject to obtaining approval from Government of India, Ministry of Corporate Affairs, Cost Audit Branch, New Delhi.

The Company has e-filed the Cost Audit Report for the financial year ended 31st March, 2013 vide SRN. S22641278 on 29th September, 2013, with Ministry of Corporate Affairs (Cost Audit Branch), New Delhi.

23. DEPOSITORY SYSTEMS

As the Members are aware that the Company''s Shares are compulsory traded in dematerialized form, the Company has arrangements with both the Depositories National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), to establish electronic connectivity of its Shares, for trading in dematerialised form.

As on 31st March, 2014, 98.36% of the Company''s total paid up Capital representing 32,491,931 Equity Shares are in dematerialized form.

In view of the numerous advantages offered by the Depository System, Members holding Shares in Physical mode are advised to avail of the facility of dematerialization from either of the depositories.

24. PARTICULARS OF EMPLOYEES

During the year under report, none of the employees of the Company was in receipt of remuneration for any part of the year, in excess of the amount of remuneration prescribed under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended upto date.

25. ADDITIONAL INFORMATION

The Company is primarily engaged in the business of manufacturing of Cotton Yarn, Denim Fabrics, Shirtings and Garments.

Information on conservation of energy, technology absorption and foreign exchange earnings and Outgo required to be disclosed pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, as amended is given in the Annexure and forms part of this Report.

26. ACKNOWLEDGEMENT

Your Directors thanks all the valued Customers, Suppliers, Shareholders, Business Associates, Financial Institutions, Bankers, Government Agencies and other Stakeholders, for their patronage and support and look forward to their continued support in future. We also thank the dedicated and committed team of employees of the Company for their contribution to the Company.

On behalf of the Board Place : Ahmedabad (S. K. SOMANY) Date:30th May, 2014 Chairman


Mar 31, 2013

To The Members,

The Directors have pleasure in presenting their 75th Annual Report of the Company, together with the audited accounts for the Financial Year ended 31st March, 2013.

1. FINANCIAL PERFORMANCE

During the Financial Year under review the business scenario for the Textile Industry was extremely challenging, even though your Company has reported a top- line growth of 21% over the previous year.

The revenue from operations for the year 2012-13 was Rs. 32,271 lacs as compared to Rs. 26,614 lacs in previous year. The loss before Prior period, Exceptional item and tax was Rs. 419 lacs against the previous year loss of Rs. 1,719 lacs. The net loss for the year was Rs. 166 lacs against the previous year net loss of Rs. 746 lacs.

2. DIVIDEND

The Board of Directors of your Company have not recommended any dividend on the paid up Equity Share Capital of the Company for the Financial Year under review considering the brought forward losses and loss during the year.

3. COTTON

India''s cotton production in the current season is likely to be 340 lacs bales out of which expected exports will be about 81 lacs bales. Due to the muted international demand and surplus production of cotton in the current season, the industry is expecting that adequate cotton will be available for domestic consumption which will be resulting in stable and range bound cotton prices in the year 2013. However, price movement is much dependent on the future procurement policies of China.

4. EXPORT

Your Company''s export performance in the year under review has improved from the last year mainly on account of denim fabric export. The FOB value of the exports during the Financial Year was Rs. 3,613 lacs against Rs. 1,939 lacs in the previous year.

5. PROSPECT

Indian economy grew by 5% in Financial Year 2013, reflecting lower than expected growth in both industry and service sectors. Inflation also was at elevated levels. However with commodity and crude oil prices on the decline from the peak and with various policy initiatives coming through, the economy is estimated to grow by around 6% in Financial Year 2014 with lower inflation.

Your Company''s business performance was adversely impacted by the weak consumer sentiment resulting in lower discretionary spends and increase in input cost.

Indian textiles industry is one of the leading sectors of Indian economy and contributes significantly to the country''s industrial output (14%), employment generation (35 million in direct and another 20 million, in indirect employment) and export earnings (17%). It contributes 4% to India''s GDP.

Consumer demand remained sluggish across the textile and apparel value chain in Financial Year 2013 due to high inflation and interest rates resulting in long periods of extended end-of-season sales, pressure on margins, thus impacting profitability.

Textile industry is one of the largest employers in India and has strong linkages with the rural economy. The growing young middle-class population is a source of great potential and provides immense opportunities to spur growth in the industry going forward.

The major challenge that the textile and apparel industry is facing is increasing cost of production arising out of rising wages, high power and interest costs.

The Baramati unit of the Company is continuously incurring loss due to shortage of labour and uncertainty in cotton price. The decision of the Company to dispose off the unit by signing Business Transfer Agreement will help to improve the profitability of the Company, as the loss is no more to be absorbed by our Ahmedabad unit.

6. EXPANSION AND MODERNISATION

Your Company is under Denim Capacity expansion which will be completed in Financial Year 2013-14 resulting in increase of its Denim Manufacturing capacity from 14 mmpa to 23 mmpa.

7. RIGHTS ISSUE

The Company had approved rights issue of equity shares to meet the requirements of CDR sanction with regard to infusion of Rs. 9.75 crores as equity capital by promoters. However, considering the prevailing market conditions, regulatory constraints and the current market quotation of our company''s shares besides the fact that the promoters have already brought in the required funds to meet the CDR stipulation, it has now been proposed to CDR Empowered Group (CDREG) for issue of Redeemable Preference Shares of an aggregate value of Rs. 9.75 crores to the promoters of the company instead of making rights issue to shareholders. The proposal is under the active consideration of CDR Empowered Group (CDREG) and awaiting their approval. This proposal will also save expenses for the company which it would have to otherwise incur for a rights issue.

8. SALE OF BARAMATI UNIT

The Company has signed the Business Transfer Agreement on 1st April, 2013 with Messrs GTN Engineering (India) Ltd., a Public Limited Company situated in Hyderabad, in the State of Andhra Pradesh, for sale of its Cotton spinning Unit at Baramati, in Pune, in the State of Maharashtra, on a Slump Sale basis at a Lump sum consideration of Rs. 29.80 crore. Out of this Rs. 24.75 crore will be utilized for payment of dues of lenders, Rs. 4.28 crores towards gap funding in modified capex and Rs. 0.77 crore towards legal fees, professional charges, gratuity and leave wages encashment. The sale of the said cotton spinning unit is subject to Company''s obtaining permission/NOC, from:-

Permission/NOC from Status

Corporate Debt Restructuring Empowered Group Awaited Shareholders'' Appproval u/s 293(1)(a) of the Co''s Act, 1956 Received through Postal Ballot Income Tax u/s 281(i)(ii) of the I.T. Act, 1961 Awaited Lenders of the Company Few lenders have given their approval & rest are awaited Labour Union Received Company is pushing hard to get these permissions at the earliest so as to conclude the sale transaction.

9. CASH FLOW STATEMENT

The Cash Flow Statement, for the year ended 31st March, 2013 is annexed hereto forming part of the Annual Report, in compliance with Clause 32 of the Listing Agreement entered in to with the Stock Exchanges.

10. INSURANCE

Adequate insurance cover has been taken for all properties of the Company including its Buildings, Plant & Machinery and Stocks against fire, flood, earthquake, explosive and other such risks as considered necessary.

11. INTERNAL CONTROL SYSTEMS

Your Company has a proper and adequate internal control procedure commensurate with its nature of business and the size of operations to ensure the timely and accurate recordings of financial transactions and adherence, to applicable Accounting Standards, optimum utilization & safety of assets, complying with applicable statutes and compliance with Corporate policy(ies). The Audit Committee periodically interacts with the Management, Internal Auditors and Statutory Auditors and tracks the implementation of corrective actions. The Audit Committee oversees the functions of internal auditor and reviews the audit plans, internal control and internal audit reports, submitted by the internal auditors, to examine and evaluate the adequate and effectiveness of the internal control system to further strengthen the internal control systems and procedures. Significant observations, emanating from the audit are acted upon. The Audit Committee of the Board of Directors comprises the majority of Independent Directors.

12. FIXED DEPOSITS

Your Company has not invited or accepted any Public Deposits under Section 58A of the Companies Act, 1956 during the year under report.

13. DIRECTORS

Shri S. K. Somany, Director retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment in accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company. The Board recommends his re-appointment.

None of the Directors are disqualified from being appointed or holding office as Directors as stipulated under Section 274(1)(g) of the Companies Act, 1956.

14. CORPORATE GOVERNANCE

Your Company has complied with the requirements relating to Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

The Reports of the Directors on ‘Corporate Governance'' and a certificate from the Auditors of the Company on Compliance of conditions of Corporate Governance, as stipulated in Clause 49 of the Listing Agreement, is given as a Separate Section Titled "Corporate Governance Report", forming part of the Annual Report.

15. CORPORATE GOVERNANCE - VOLUNTARY GUIDELINES 2009

The Voluntary Guidelines 2009 on Corporate Governance issued by the Ministry of Corporate Affairs, Government of India, for voluntary adoption of a set of good practices by the Corporate Sector in addition to the existing laws for further improvement of Corporate Standards and practices, is recommendatory in nature this Guidelines will be considered by the Management after the enactment of new Company Bill by the Government. The Management however, generally reviews the same from time to time to ensure the adherence of the same voluntarily in line with the requirements best suited to your Company gradually in phases.

16. MANAGEMENT DISCUSSION AND ANALYSIS

In accordance with requirement of Clause 49 of the Listing Agreement, Management Discussion and Analysis Report is attached to and forms integral part of this report.

17. DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors of the Company to the best of their knowledge and belief and on the basis of information and explanation obtained by them from the operating management, hereby state and confirm pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956 in respect of Financial Year under review: -

(i) that in the preparation of the annual accounts for the Financial Year ended 31st March, 2013 the applicable Accounting Standards have been followed along with proper explanation relating to material departures, wherever, applicable;

(ii) that the Company has 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 as on 31st March, 2013 and of the loss of the Company for the year under review;

(iii) that proper and sufficient care have 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

(iv) that the attached Annual Accounts for the Financial Year ended 31st March, 2013 have been prepared on a ‘going concern'' basis.

18. AUDITORS

M/s Pipara & Company, Chartered Accountants, (ICAI Firm Registration No.107929W), the Statutory Auditors of the Company retire at the conclusion of forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment for the Financial Year 2013-14.

Necessary certificate under Section 224(1B) of the Companies Act, 1956 from the retiring auditors has been received, confirming that their re-appointment, if made would be in accordance with Sub-Section (1B) of Section 224 of the Companies Act, 1956 and that they are not disqualified for such re-appointment within the meaning of Section 226 of the said Act.

Your Directors, on the recommendation of the Audit Committee, recommend the Members to consider their re-appointment for the financial year ending 31st March, 2014 at the remuneration to be decided by the Board of Directors of the Company.

19. AUDITORS'' REPORT

The observations, in the Audit Reports, are dealt by way of notes to the accounts at appropriate places and notes being self explanatory need no further comments or explanations from the Board of Directors.

20. INDUSTRIAL RELATIONS

Overall industrial relations, during the year under report, were healthy and cordial.

21. COST AUDITORS

In compliance with the directives of the Central Government under the provisions of Section 233(B) of the Companies Act, 1956 the Board has appointed a firm of Cost Accountants, M/s. N. D. Birla & Co., as Cost Auditors of the Company to carry out Cost Audit of the Company for the Financial Year ending 31st March, 2014 subject to obtaining approval from Government of India, Ministry of Corporate Affairs, Cost Audit Branch, New Delhi.

22. DEPOSITORY SYSTEMS

The Company''s Shares are compulsory traded in dematerialized form. The Company has arrangements with both the Depositories National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), to establish electronic connectivity of its Shares, for trading in dematerialised form.

23. PARTICULARS OF EMPLOYEES

During the year under report, none of the employees of the Company was in receipt of remuneration for any part of the year, in excess of the amount of remuneration prescribed under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended upto date.

24. ADDITIONAL INFORMATION

The Company is primarily engaged in the business of manufacturing and sale of Cotton Yarn, Polyester Blended Yarn, Denim (Indigo dyed) Fabrics, Shirtings and Garments.

The particulars required to be provided under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, as amended from time to time regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in the Annexure, which forms part of this Report.

25. ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation towards all associates including Customers, Suppliers, Government Agencies, Financial Institutions, Bankers, Shareholders, Employees and others, who have reposed their confidence in the Company. Your Directors look forward to their continued support in future. On behalf of the Board

Place : Ahmedabad (S. K. SOMANY)

Date : 24th May, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting their 74th Annual Report of the Company, along with the audited Accounts for the year ended 31st March, 2012.

1. FINANCIAL HIGHLIGHTS

The Financial Year under review was challenging for the entire Textile Industry. The Unprecedented price fluctuation in cotton and cotton yarn in the global and domestic markets, coupled with frequent changes in the Central Government policies, devaluation of the Indian Rupees cost World currencies resulted in tremendous problems for the entire Textile value chain. The Textile spinning industry was further subjected to problems of severe power cut and non availability of skilled labour resulting in increased cost on the lab our front. All these collectively resulted in a reverse business scenario and due to uncertainty in the yarn market your Company had curtailed the productivity at the Baramati Unit for two months.

During the year, due to the reasons mentioned above, the Revenue from Operations was lower by 4.38% at Rs. 26,614 lacs as compared to Rs. 27,833 lacs in the previous year. The Company has incurred a net loss of Rs. 746 lacs against the previous year net loss of Rs. 475 lacs.

2. DIVIDEND

The Board of Directors of your Company have not recommended any dividend for the financial year under review considering the loss incurred during the year.

3. COTTON

Although Cotton production in India is expected to be the highest (over 35 million bales) the volatility in the prices neither safe guarded the interest of farmers nor that of the mills. Added to this was the permission to allow export of cotton under OGL which further boosted the volatility. The Government of India was forced to stop the export of cotton for some time to control the runaway prices.

4. EXPORT

The sharp increase in the price of cotton greatly lowered the demand of both yarn and fabrics. The FOB value of export during the year under review was Rs. 1,939 lacs as against Rs. 3,219 lacs in the previous year.

5. PROSPECT

The recession in the European and the US market still continues but it is hoped that some improvements in the US Economy will help to increase our exports to that country. The Government of India has not been able to control the deficit financing and the cost of living continues to rise unabated which has also affected the operations of your Company.

Cost of production increased substantially due to more than 20% rise in the Power cost and other input costs which resulted in Indian Textile Industry becoming less competitive in export market as a result Foreign Exchange earnings capacity of textile industry in India has greatly reduced. In order to bring the accelerated growth in Textile Industry, suitable incentive policy from the Government is the need of the hour.

Notwithstanding the current economic environment there are strong reasons to be bullish on the country's long term growth potential. Favorable demographics a large growing middle class with increasing disposal incomes support a strong consumption story.

It is worth to note that the Government proposes to increase the investment in this sector to generate more employment through various schemes viz., Scheme for Integrated Textile Parks (SIP), Technology Up gradation Fund Scheme (TUFs), Integrated Skill Development Scheme (ISDS), Technology Mission on Technical Textiles (TMTT). The allocation for this sector during the 12th Five Year Plan is proposed to be increased to around Rs. 49,650 crore as against an allocation of Rs.14,000 crore during the 11th Five Year Plan.

6. EXPANSION AND MODERNISATION

Modernization and expansion of the textile industries in India is almost stagnant. The Government must also ask the banking industries to make available adequate fund to modernize, expand and bring about reduction in the cost of manufacture to compete in the export market particularly against Pakistan, Bangladesh, Vietnam and China.

7. RIGHTS ISSUE

As reported last year, the Board had approved, in principle, issue of equity share of Rs. 10/- each on rights basis at par for an amount not exceeding Rs.10 crore as per the stipulation made under the Capital Debt Restructuring (CDR) Scheme, sanctioned to the Company by Corporate Debt Restructuring (CDR) Cell. Shareholders had also subsequently approved the same. However, the Draft Letter of Offer which was filed with the Securities and Exchange Board of India (SEBI), Kolkata, for their approval was withdrawn by the Company because of substantial change in the project cost from Rs. 12.35 crores to Rs. 25.72 crores. The Company is now having the option to file a revised offer letter for rights issue or opt for preferential issue of equity shares to promoters, as SEBI (SAST) Regulations, 2011 which have been notified by SEBI, interlaid provides that acquisition of shares not involving a change of control over the Company, pursuant to a CDR scheme shall be exempted from the obligation of making an open offer subject to fulfillment of certain conditions.

Considering the current market scenario, the Company has now approached CDR seeking approval for raising of equity capital either by way of right issue to shareholders or by way of preferential issue to promoters. The decision of CDR was received permitting the Company for raising the equity capital in either of the modes as approached by the Company. However in order to provide equal opportunity to all the Equity Shareholders, the Board has finally decided to proceed with the issue of Equity Shares of Rs. 10/- each on Rights Basis to existing Shareholders of the Company in terms of the Special Resolution passed at an Extra Ordinary General Meeting held on 7th December, 2009, instead of Preferential Issue, to the promoters and promoters group, as earlier decided by the Board at its meeting held on 24th May, 2012. Revised Offer Letter for Rights Issue is being made ready to file with SEBI, Kolkata.

8. CASH FLOW STATEMENT

The Cash Flow Statement, for the year ended 31st March, 2012 in terms of Clause 32 of the Listing Agreement with the Stock Exchanges is annexed hereto forming part of the Annual Report.

9. INSURANCE

Adequate insurance cover has been taken for all properties of the Company against fire, flood, earthquake, explosive and any such other risks as considered necessary.

10. INTERNAL CONTROL SYSTEMS

Your Company has a proper and adequate internal control system commensurate with its nature and size of business to ensure the timely and accurate recordings of financial transactions and adherence, in particular, to applicable Accounting Standards, safety of assets, optimum utilization, applicable laws, rules & regulations and Management policy. The Audit Committee meets periodically with the management and Internal Audit Team to examine and evaluate the adequacy and effectiveness of the internal control systems and takes necessary steps wherever found necessary, to further strengthen the internal control systems and procedures. Significant findings are brought to the notice of the Audit Committee of the Board and corrective measures are recommended for implementation.

11. FIXED DEPOSITS

Your Company has not invited any deposits from public/shareholders in accordance with Section 58A of the Companies Act, 1956.

12. DIRECTORS

Shri Bajrang Lal Dhoot, Director retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment in accordance with the provisions of the Companies Act, 1956, and Articles of Association of the Company. The Board recommends his re-appointment.

None of the Directors are disqualified from being appointed or holding office as Directors as stipulated under Section 274 (1) (g) of the Companies Act, 1956.

13. CORPORATE GOVERNANCE

The Company has complied with Corporate Governance Code as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges.

A separate Section on 'Corporate Governance' along with Certificate from Statutory Auditors confirming compliance with Clause 49 of the Listing Agreement is annexed hereto and forms a part of this Report.

14. CORPORATE GOVERNANCE - VOLUNTARY GUIDELINES 2009

The Ministry of Corporate Affairs has issued the Corporate Governance - Voluntary Guidelines 2009 for voluntary adoption of a set of good practices by the Corporate Sector in addition to the existing laws for further improvement of Corporate Standards and practices, which is recommendatory in nature. The Management generally reviews the same from time to time to ensure the adherence of the same voluntarily in line with the requirements best suited to your Company gradually in phases.

15. MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the Listing Agreement, Management Discussion and Analysis Report is attached to and forms integral part of this report.

16. DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, your Directors to the best of their knowledge and belief and on the basis of information and explanations obtained by them from the operating management, state and confirm that: -

(i) In the preparation of the annual accounts for the financial year ended 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures, wherever, applicable;

(ii) The Company has 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 loss of the Company for the year under review ;

(iii) Proper and sufficient care have 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

(iv) The attached Annual accounts for the financial year ended 31st March, 2012 have been prepared on a 'going concern' basis.

17. AUDITORS

M/s Pipara & Company, Chartered Accountants, (ICAI registration No.107929W), retire as Statutory Auditors of the Company at the forthcoming Annual General Meeting and have expressed their eligibility and willingness to accept the office of Statutory Auditors, if appointed.

A Certificate from the Auditors has been received, to the effect that their re-appointment, if made would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

Members are requested to consider their re-appointment for the financial year ending 31st March, 2013, in the remuneration to be decided by the Board.

18. AUDITORS' REPORT

The Auditors' Report is unqualified. With regard to the Auditors observations in their Report, the Board wishes to state that Note nos. 13, 13.1 and 13.2 appearing in the Notes on Accounts and referred to in the Auditors' Report are self explanatory and therefore, do not call for any further comments and explanations under Section 217 of the Companies Act, 1956.

19. INDUSTRIAL RELATIONS

Relations with the staff and lab our remained peaceful and cordial.

20. COST AUDITORS

In accordance with the directives of the Central Government under the provisions of Section 233 (B) of the Companies Act, 1956, M/s. N. D. Birla & Co., have been appointed as Cost Auditors of the Company to conduct an audit of Cost Accounting records of the Company for the current year ending 31st March, 2013 subject to approval from Government of India, Ministry of Corporate Affairs, Cost Audit Branch.

21. DEPOSITORY SYSTEMS

It is mandatory that the Shares of the Company are traded in electronic form. The Company has entered into Agreements with both the depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

22. PARTICULARS OF EMPLOYEES

During the year under review, the Company has no employee, who qualifies for disclosures in so far as to remuneration drawn pursuant to Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 as amended up to date.

23. ADDITIONAL INFORMATION

The Company is primarily engaged in the business of manufacturing and sale of cotton yarn, polyester blended yarn, Denim (Indigo dyed) fabrics, shirting's and garments.

The Disclosures of particulars under Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, as amended from time to time relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo respectively is attached hereto and forms part of this Report.

24. ACKNOWLEDGEMENT

Your Directors thank all the shareholders, all employees of the Company, customers, suppliers, Government Authorities, Financial Institutions and bankers for their continued support.

You Directors look forward to their continued support in future.

On behalf of the Board

Place : Ahmadabad (S. K. SOMANY)

Date : 1st August, 2012 Chairman


Mar 31, 2011

The Members,

The Directors have pleasure in presenting their 73rd Annual Report of the Company, along with the audited Accounts for the year ended 31st March, 2011.

1. FINANCIAL RESULTS:

The financial results are summarized below:

(Rs. In Lacs)

2010-11 2009-10

Turnover 27,613 20,756

Other Income 818 802

Total Income 28,431 21,558

Profit/(Loss) before Depreciation, Prior Period Items, Exceptional Items and Tax 940 (296)

Less : Depreciation 1,653 1,655

Profit/(Loss)before Prior Period Item, Exceptional Items and Tax (713) (1,951)

Add : Prior Period Items- income/(loss) 186 12

Less : Exceptional Items (55) (893)

Profit(Loss) before Taxation (582) (2,832)

Add : Provision for Deferred Tax Income 107 964

Net Profit/(Loss) for the year (475) (1,868)

Add : Balance being Profit/(loss) brought forward from previous year (4,164) (2,296)

Balance being Profit/(loss) carried to Balance Sheet (4,639) (4,164)

2. DIVIDEND

Your Directors do not recommend any dividend for the year 2010-11, in view of net loss during the year.

3. OPERATIONS

Mobile connectivity has brought about a major revolution. The farmers in the remotest area in our country are able to sell their produce at a much better price thus improving their standard of living. This has resulted in a great boost to the local demand of fabrics and the turnover of the Company has increased by 33% to Rs.27,613 lacs. The Company has been able to reduce its net loss to Rs. 475 lacs, compared to loss of Rs. 1,868 lacs in the previous year, which is around 1/4th of the loss sustained in the previous year. Shortage of adequate working capital was a major impediment which affected the performance of the Company alongwith higher input cost of raw materials, specially cotton. Non availability of skilled manpower in the spinning unit at Baramati Maharashtra is a cause of worry. Training is now being imparted to female workers so as to overcome the problem of labour shortage.

4. COTTON

With more remunerative prices, farmers increased the area in cotton cultivation. In anticipation of a record production of cotton, the Government of India allowed the export of 55 lac bales. The unseasonal rain in December last year not only reduced the size of the crop but also the quality was inferior. This resulted in an increase in cotton prices from Rs.11,000/- per bale to as high as Rs. 32,000/- per bale. After the ban on the export of cotton, prices have fallen to Rs.22,000/- per bale, but this is twice in valuation when compared to the previous year.

5. EXPORT

Despite a substantial increase in the cost of production and facing stiff competition, the Company was able to almost double its export to Rs. 3,219 lacs FOB and have ventured into the upper segment by selling desized and mercerized Denim fabrics in different shades.

6. PROSPECT

Our Country is now considered as the most favourite destination by foreign investors. The rapid industrialization and massive expenditure in infrastructure development by our Government has created a situation where trained manpower has become very difficult to get. This situation will further worsen and Textile, being a labour intensive industry will need a major investment in automation to maintain the tempo of production. This is only possible if the Government of India would help the industry by making available adequate finance at reasonable rate of interest alongwith a loan having long term maturity to give an impetus to the industry to go in for automation in a very big way.

7. EXPANSION AND MODERNISATION

The Company was sanctioned the capital expenditure for completing its Garment project and other essential capital expenditure for its existing fabric process house under the Corporate Debt Restructuring (CDR) Scheme approved by CDR Cell vide Letter of Approval (LOA) No. BY.CDR/AG No. 1110/2008-2009 dated 26th February, 2009. Out of sanctioned capital expenditure, the Company incurred a sum of Rs. 399 lacs (bare minimum CAPEX required to be incurred) and financed mainly out of the promoters' contribution required to be brought in under CDR scheme.

The Company has not availed of the sanctioned term loan of Rs 900 lacs from the lenders during the year under review and upto the date of this Report.

The financials of the Company for the year under review improved mainly due to better off-take of Denim fabrics. The future prospects of Denim industry looks bright due to better domestic and international demands. The higher demand for Denim fabrics will lead to higher demand for open end yarn and the availability of open end yarn in India is limited due to lesser number of manufacturers.

The Company submitted its revised CAPEX plan to the monitoring committee in the meeting held in the month of November, 2010 at Mumbai. On receipt of our revised CAPEX, the monitoring committee had appointed Bombay Textile Research Association (BTRA) to conduct Techno-Economic Viability (TEV) study of the Company. BTRA conducted its study and held detailed discussions with management personnel at various level and suggested changes in the CAPEX programme of the Company. Accordingly, Company has revised its CAPEX programme with an outlay of Rs.25.96 crores which will result in an increase in the Denim manufacturing capacity from 14 mmpa to 23 mmpa. The Company will shortly approach lenders and the CDR to take their approval for the revised CAPEX programme.

8. RIGHTS ISSUE

The Board has approved, in principle, issue of equity share of Rs.10/- each on Rights basis at par for an amount not exceeding Rs.10 crore as per the stipulation made under the Capital Debt Restructuring (CDR) Scheme, sanctioned to the Company by Corporate Debt Restructuring (CDR) Cell. Shareholders have subsequently approved the same. The Company has filed its Draft letter of offer with the Securities and Exchange Board of India (SEBI), Kolkata, for their approval.

9. SUBSIDIARY COMPANY

As reported in our last year's report, that Soma Textile FZE, an overseas wholly owned subsidiary ceased to be a subsidiary of the Company at the close of the year ended on 31st March, 2010 upon dilution of Company's holding to 40%, from 100% in the paid up capital of the said subsidiary and consequently it has become an "Associate" of the Company.

10. CASH FLOW STATEMENT

The Cash Flow Statement, for the year under reference, as prepared in accordance with the Accounting Standard on Cash Flow Statement (AS 3) issued by the Institute of Chartered Accountants of India (ICAI), is included in the Annual Accounts in conformity with the provisions of Clause 32 of the Listing Agreement with the Stock Exchanges.

11. INSURANCE

Adequate insurance cover has been taken for all properties of the Company against fire, flood, earthquake, explosive and any such other risks as considered necessary.

12. INTERNAL CONTROL SYSTEMS

Your Company has adequate internal control system commensurate with its nature and size of business. The Audit Committee examines and evaluates the adequacy and effectiveness of the internal control systems and takes necessary steps wherever found necessary, to further strengthen the internal control systems and procedures. Significant findings are brought to the notice of the Audit Committee of the Board and corrective measures are recommended for implementation.

13. FIXED DEPOSITS

Your Company has not accepted any fixed deposits under the provisions of Section 58A of the Companies Act, 1956 during the year and upto the date of this Report.

14. DIRECTORS

Shri Brij Kishore Hurkat, Director retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment in accordance with the provisions of the Companies Act, 1956, and Articles of Association of the Company. The Board recommends his re-appointment.

None of the Directors are disqualified from being appointed or holding office as Directors as stipulated under Section 274 (1) (g) of the Companies Act, 1956.

15. CORPORATE GOVERNANCE

Your Company has complied with all the requirements of the Code of Corporate Governance as specified under Clause 49 of the Listing Agreements with the Stock Exchanges.

A separate Section titled 'Corporate Governance' as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges is annexed hereto and forms part of this Report. A Certificate from Statutory Auditors of the Company confirming compliance with the clauses of Corporate Governance laid down under the said Clause 49 of the Listing Agreement is also annexed hereto and forms a part of this Report.

16. CORPORATE GOVERNANCE - VOLUNTARY GUIDELINES 2009

The Ministry of Corporate Affairs has announced the Corporate Governance - Voluntary Guidelines 2009. The preamble sets the tone for a set of good practices for voluntary adoption by the Corporate Sector and which may be adopted voluntarily by the Corporates in addition to the existing laws for further improvement of Corporate Standards and practices, but recommendatory in nature. It is being reviewed by the management to ensure the adherence of the same voluntarily in line with the requirements best suited to your Company gradually in phases.

17. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report is appended to this Report as required by the provisions of the Code of Corporate Governance, under Clause 49 of the Listing Agreement forming a part of Annual Report.

18. DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, your Directors to the best of their knowledge and belief and on the basis of information and explanation obtained by them from the operating management, state and confirm that: - (i) In the preparation of the annual accounts for the financial year ended 31 st March, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures, wherever, applicable;

(ii) The Company has 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 loss of the Company for the year under review ;

(iii) Proper and sufficient care have 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

(iv) The attached Annual accounts for the financial year ended 31st March, 2011 have been prepared on a 'going concern' basis.

19. AUDITORS

M/s Pipara & Company, Chartered Accounts, Ahmedabad, Statutory Auditors of the Company bearing ICAI registration No.107929W, retire at the ensuing Annual General Meeting of the Company and, being eligible, offer themselves for re-appointment. Your Company has received a certificate from them confirming that their appointment, if made, will be in accordance with the provisions of Section 224 (1B) of the Companies Act, 1956 and that they are not disqualified from re-appointment within the meaning of Section 226 of the Companies Act, 1956.

The Audit Committee recommends re-appointment of M/s. Pipara & Co. as Statutory Auditors of the Company for the Financial Year ending on 31st March, 2012, subject to necessary approval from the shareholders of the Company at the ensuing, 73rd Annual General Meeting.

20. AUDITORS'REPORT

With regard to the observation made under para (VI) of the Auditors' Report on the claim of deemed duty drawback for prior periods recognized as revenue by the Company, your Directors state that the management is reasonably confident of recovery of the claim as the claim has been made and filed with the Development Commissioner SEEPZ, Mumbai pursuant to the circular issued by Director General of Foreign Trade (DGFT) which is the governing body and the same is legally tenable and binding on the Development Commissioner.

And the Auditors' observation on the Investment and the amount advanced to Soma Textile FZC, an overseas Associate (the Erstwhile 100% Subsidiary) of the Company read with note no.24 of Schedule 22(B) on Notes of Account of the Annual Report is self explanatory and do not require further explanation.

21. INDUSTRIAL RELATIONS

Industrial relations remained by and large cordial during the year.

22. COST AUDITORS

Pursuant to the directives of the Central Government under the provisions of Section 233 (B) of the Companies Act, 1956, M/s. N. D. Birla & Co., have been appointed as Cost Auditors of the Company for the financial year ending 31st March, 2012 to conduct an audit of Cost Accounting records of the Company with due approval received from Government of India, Ministry of Corporate Affairs, Cost Audit Branch vide their Sanction Letter NO. 52/129/CAB/1988 dated 3rd May, 2011.

23. PARTICULARS OF EMPLOYEES

The Company has no employee drawing a remuneration as prescribed under Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 as amended, during the year under review.

24. ADDITIONAL INFORMATION

A statement giving details of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo pursuant to 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 Board of Directors) Rules 1988, is annexed hereto and forms part of this report.

25. ACKNOWLEDGEMENT

Your Directors thank all the shareholders, all employees of the Company, customers, suppliers, Government Authorities, Financial Institutions and bankers for their continued support. Your Directors look forward to this continued support in future as well.

On behalf of the Board

Place : Ahmedabad (S. K. SOMANY)

Date : 18th May, 2011 Chairman


Mar 31, 2010

We have pleasure in presenting the 72nd Annual Report of the Company, along with audited statements of Accounts for the year ended 31st March, 2010. The summarized financial results are given below:

1. SUMMARISED FINANCIAL RESULTS:

(Rs. In Lacs) 2009-10 2008-09

Turnover 20,756 15,707

Other Income 802 953

Total Income 21,558 16,660

Loss before Depreciation, Prior Period Item, Exceptional Items and Tax 296 1,850

Add : Depreciation 1,655 1,651

Loss before Prior Period Item, Exceptional Items and Tax 1,951 3,501

Add : Prior Period Items- income (12) -

Add : Exceptional Items 893 (442)

Loss before Taxation 2,832 3,059

Add : Taxes - 16

Add : Provision for Deferred Tax (964) (238)

Net Loss for the year 1,868 2,837

Add : Balance brought forward from Previous year 2,296 (541)

Balance being loss carried to Balance Sheet 4,164 2,296



2. DIVIDEND

Your Directors do not recommend any dividend for the year 2009-10, in view of net loss during the year.

3. RESULTS OF OPERATIONS

During the year under review, the operations of the Company improved due to good domestic demand. Due to the increase in the activity, the sale turnover of the Company has increased by 32% at Rs.20,756 lacs as compared to Rs.15,707 lacs in the Previous year.

The Company has incurred a net loss of Rs.1,868 lacs against the Previous years net loss of Rs. 2,837 lacs. This was mainly due to volatility in the input cost of the major raw materials, cotton and yarn as well as the high power cost and labour shortage during the period under review.

4. COTTON

Cotton production during the year was a little lower than the previous year, but due to remunerative export prices the average input cost of cotton to the industry was higher. The farmers have been able to get better prices for their produce and this will encourage them to increase more acreage in cotton production.

5. EXPORT

FOB value of export turnover at Rs.1,685 lacs was 53% lower than export of Rs.3,584 lacs achieved in the previous year mainly due to slow down in the world economy.

6. PROSPECT

Foreign investment in our country is steadily increasing and this has brought about a situation where we are not able to get adequate trained manpower to maintain the level of production. In the summer months and during festival season, your company has been compelled to keep production machinery stopped due to non availability of proper manpower. This situation will increase rapidly in the years to come and in the textile industry where manpower requirement is very high this industry will find it very difficult to maintain the tempo of production. The Government of India should consider inducing the textile manufacturers to go in for modern equipment to reduce the requirement of manpower to maintain the production. This would be feasible only with the Government extending adequate finance at reasonable rates to the industry to go in for automation.

The action taken by the Government in giving remunerative prices to the farmers has resulted in increased expenditure on essential requirements. Sales of fabric and garments are expected to increase in the home market giving a much needed helping hand to the textile industry.

7. EXPANSION AND MODERNISATION

The Company shall incur capital expenditure as sanctioned by the lenders under Corporate Debt Restructuring Scheme approved vide Letter of Approval (LOA) No. BY.CDR/AG No. 1110/2008-2009 dated 26th February, 2009 for completing the Garment project and essential capital expenditure in existing fabric process house.

8. SUBSIDIARY COMPANY

The Audited Statement of Accounts for the year ended 31st March, 2010 of Soma Textile FZE, Sharjah, UAE, the Companys wholly owned subsidiary together with statement in respect of subsidiary as required pursuant to the provisions of Section 212 of the Companies Act, 1956 are attached.

During the year under report, Soma Textile FZE, an overseas wholly owned subsidiary of the Company has raised its Share Capital from AED 300000 to AED 750000. The Company has not subscribed to the additional capital offered to the Company on first priority basis. The subsidiary Company has, therefore, allotted additional 450 shares of AED 1000 each to two other foreign shareholders i.e. 225 shares each of an aggregate value of AED 450000 and that resulted in dilution of Companys holding in its subsidiary to 40%, from 100% in the paid up capital of its subsidiary. Consequent upon Soma Textile FZE ceased to be a subsidiary of the Company after the close of business hours as on 31st March, 2010.

9. CONSOLIDATED FINANCIAL STATEMENT

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Clause 32 of the Listing Agreement entered into with the Stock Exchanges and prepared the Financial Statements in accordance with Accounting Standards prescribed by the Institute of Chartered Accountants of India.

10. CASH FLOW STATEMENT

As required under Clause 32 of the Listing Agreement with the Stock Exchange(s), in India, a Cash Flow Statement, as prepared in accordance with the Accounting Standard on Cash Flow Statement (AS 3) issued by the Institute of Chartered Accountants of India (ICAI), is given along with Balance Sheet and Profit and Loss Account.

11. INSURANCE

All the properties of our Company have been adequately insured against fire, flood, earthquake, and explosive risks

12. INTERNAL CONTROL SYSTEMS

The Company has in place proper and effective control system commensurate with size of its operations, to ensure that all systems are properly functioning and policies are being complied with as required. The Audit Committee reviews and evaluates the adequacy, relevance and effectiveness of the internal control systems and makes recommendation, wherever found necessary.

13. FIXED DEPOSITS

Your Company has not invited/accepted any deposits from the public in terms of Section 58A of the Companies Act, 1956 during the year and up to the date of this Report.

14. DIRECTORS

Appointment

Shri Anoop Sharma, has been nominated by IDBI Bank Ltd. as its Nominee Director on the Board of the Company effective from 19th April, 2010 in place of Shri B. H. Parghi, IDBIs existing nominee on the Board of the Company.

Cessation

IDBI Bank Ltd. (IDBI) has withdrawn Shri B. H. Parghi, as its Nominee Director from the Board of Directors of the Company with effect from 19th April, 2010 by simultaneously appointing Shri Anoop Sharma as its nominee on the Board of the Company.

The Board recorded its appreciation for the services rendered by Shri B. H. Parghi during his association with the Company, as a nominee Director on the Board for and on behalf of IDBI.

Rotation

Shri Shrikant Bhat, Director and the Executive Director of the Company retires at the forthcoming Annual General Meeting, and being eligible, offers himself for re-appointment. The Board recommends the appointment of Shri Shrikant Bhat.

15. CORPORATE GOVERNANCE

Your Directors are happy to report that your Company is compliant with the Corporate Governance requirements as per Clause 49 of the Listing Agreement with Stock Exchanges. Your Company has been committed to the highest standard of Corporate Governance practices in the entire gamut of its business policy.

A separate Report on Corporate Governance pursuant to Clause 49 of the Listing Agreement with Stock Exchanges is attached as a separate annexure and forms a part of this Report. A Certificate from Statutory Auditors of the Company regarding compliance of the conditions of Corporate Governance under Clause 49 of the Listing Agreement is also attached to this Report.

16. MANAGEMENT DISCUSSION AND ANALYSIS

A Report on Management Discussion and Analysis is presented separately pursuant to the provisions of the Corporate Governance, under Clause 49 of the Listing Agreement forming part of this Annual Report.

17. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956 and on the basis of the information received by them, your Directors confirm: –

(i) That in the preparation of the annual accounts for the financial year ended 31st March, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures wherever applicable ;

(ii) That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for the year under review ;

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

(iv) That the Directors have prepared the annual accounts for the financial year ended 31st March, 2010 on a ‘going concern basis.

18. AUDITORS

The Statutory Auditors, M/s Pipara & Company, retire at the 72nd Annual General Meeting of the Company and, being eligible, offer themselves for re-appointment.

The Board of Directors recommends re-appointment of M/s. Pipara & Co. as Statutory Auditors of the Company, subject to necessary approval from the shareholders of the Company at the 72nd AGM.

19. AUDITORS REPORT

The Auditors Report to the Shareholders does not contain any qualification. Note no.23 of Schedule 22(B) to the Notes on Accounts referred to by the Statutory Auditors in their Auditors Report is self-explanatory and therefore do not call for any further elucidation. The Directors Report should be read in conjunction with the Auditors Report and Notes to Accounts annexed hereafter.

20. COST AUDITORS

M/s. N. D. Birla & Co., a Cost Accountant firm have been appointed as Cost Auditors of the Company for the financial year ending 31st March, 2011 to conduct an audit of Cost Accounting records of the Company with due sanction of the Central Government.

21. PARTICULARS OF EMPLOYEES

Information on the particulars of employees remuneration as per Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to all shareholder of the Company excluding the statement of Particulars of Employees remuneration. Any shareholder, interested in such particulars may write to the Company Secretary at the Registered Office of the Company for a copy of the Statement.

22. ADDITIONAL INFORMATION

Information pursuant to Clause (e) of Sub-Section (1) of Section 217 of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo and forming part of the Directors Report are given as annexure attached hereto.

23. ACKNOWLEDGEMENT

The Directors thank all its employees for their contribution and the shareholders, customers, Government Authorities, Financial Institutions and bankers for their continued support.

On behalf of the Board Place : Ahmedabad (S. K. SOMANY) Date :29th May, 2010 Chairman

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