Directors Report of Sportking India Ltd.

Mar 31, 2018

Dear Members

The Directors of your company are pleased to present their Twenty Ninth Annual Report on the affairs of the company together with Audited Accounts of the Company for the year ended 31st March, 2018

1. FINANCIAL RESULTS

The financial statements of the Company for the year ended 31st March, 2018, are the first financial statement of the Company which have been prepared in accordance with the provisions of Indian Accounting Standards (Ind AS) Rules 2015. The financial statements for the year ended 31st March, 2017 and transition date of 1st April, 2016 have been restated in accordance with Ind AS for comparative information.

The financial performance of your Company for the year 2017-18 & 2016-17 are as under:

(Rupees in Lakhs)

Particulars	2017-18	2016-17
Revenue from Operations	105467.42	101552.73
Other Income	1287.83	1409.65
Profit before Depreciation, Interest and Tax (PBDIT)	11420.20	13255.90
Finance/Interest Cost	2904.77	4011.06
Profit before Depreciation and Tax (PBDT)	8515.43	9244.84
Depreciation and Amortisation Expense	5627.39	5773.86
Profit before Tax (PBT)	2888.04	3470.98
Provision for Tax Current Tax	1745.48	2030.81
Prior Period Tax	-148.28	60.00
Deferred Tax	-625.00	-798.00
Profit after Tax (PAT)	1915.84	2178.17
Other Comprehensive Income (Net of Tax of Rs. -8.83 Lakhs in Current Year and Rs. 2.25 Lakhs in Previous Year)	16.69	-4.25
Total Comprehensive Income	1932.53	2173.92
Earnings Per Share (In Rs.) Basic	53.80	61.17
Diluted	53.80	61.17

2. MANAGEMENT''S DISCUSSION AND ANALYSIS BUSINESS REVIEW

Economic Outlook

After a prolonged slowdown, the Global Economic Growth accelerated to 3.3% in the year 2017. It was the best year for the global economy since the global financial crisis of 2008 with low inflation underpinning rapid growth. Growth in the year 2018 is also expected to remain robust at 3.7% which may possibly represent a peak as global growth encounters new bumps. The advanced economies witnessed expansion owing to increased investments and manufacturing output. Similarly, key emerging markets and developing economies, including Brazil, China and India, posted strong upward momentum with projected growth of 4.5% in the year 2018 and moving forward to 4.7% in the year 2019.

During financial year 2017-18, the Indian economy exhibited signs of turnaround, with most macroeconomic indicators pointing towards sustained recovery. notwithstanding the challenges posed by the lingering effect of demonetization, implementation of Goods and Services Taxes (GST) and rising real interest rate, India became the fastest growing economy in the world, even surpassing China in the second half. As per the provisional estimates released by the Central Statistical Organization (CSO), India''s Gross Domestic Product (GDP) grew by a healthy 6.7% y-o-y in 2017-18, albeit slower compared to 7.1% in the previous year. GDP growth was largely driven by robust performance of the services sector, which grew by 7.9% yo-y as against 7.7% y-o-y in the previous year. Despite headwinds, industry growth was also steady at 5.5% y-o-y compared to 5.6% y-o-y previously. Within industry, manufacturing growth slowed to 5.7% y-o-y (prior 7.9%) on account of a transient drag on coal and cement industry.

The level of exports from India reached to a level of USD 303 Billions with a growth of 9.8% in FY2017-18, the highest growth in six years. With a higher rise in imports, overall trade deficit reached to USD 162 Billions. With the ongoing global trade recovery, exports can strongly contribute to the growth story; however, this calls for focus on better infrastructure, affordable capital and improved labour productivity. On a positive note, strong private consumption and services are expected to continue to support economic activity. The private investment is expected to revive as the corporate sector adjusts to the GST regime and infrastructure spending increases.

The year 2017-18 was also a year of structural reforms with the implementation of GST, major thrust on Insolvency and Bankruptcy proceedings and Government''s massive bank recapitalization plan. The reform initiatives have already helped the India jump 30 spots in World''s Ease of Doing Business Ranking and will help the economy anchor to a robust and sustained growth trajectory.

Textile Outlook

India''s textiles sector is one of the oldest industries in Indian economy dating back several centuries. Even today, textiles sector is one of the largest contributors to India''s exports with approximately 13 per cent of total exports. The textiles industry is also labour intensive and is one of the largest employer. The textile industry employs about 105 million people directly and indirectly. India''s overall textile exports during FY 2017-18 stood at US$ 37.74 billion. The Indian Textile Industry contributes approximately 2 per cent to India''s Gross Domestic Product (GDP), 10 per cent of manufacturing production and 14 per cent to overall Index of Industrial Production (IIP). The Indian textiles industry, currently estimated at around US$ 150 billion, is expected to reach US$ 230 billion by 2020.

Along with the upbeat outlook for the global economy, the textile and apparel industry is also expected to witness growth across developed and emerging markets. While the apparel industry is still largely dominated by the European Union and the US, countries like China, India and Italy are emerging as key exporters of apparel and as future destinations for consumption.

The fundamental strength of the textile industry is its strong production base of wide range of fibre and yarns- from natural fibres like cotton, jute, silk and wool to synthetic and manmade fibres such as polyester, viscose, nylon and acrylic. The challenge here is the fluctuation in prices of the raw materials like wool and increase in oil prices which increase the input costs.

India remains the second largest exporter of Textile and Clothing (T&C) with a global share of 5%. Overall T&C exports in key Asian geographies have come down over the last few years primarily driven by lower exports for both China and India. Driven by rising labour cost and concerns over pollution, China has been losing its competitiveness in the global market. China''s declining market share has provided an opportunity for other key textile exporters to scale up, primarily through the garmenting route. Bangladesh''s exports have been growing rapidly and the country is currently the third largest textile exporter globally.

The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. High economic growth has resulted in higher disposable income, which has led to rise in demand for products creating a huge domestic market. With consumerism and disposable income on the rise, the retail sector

The production of cotton in India is estimated to increase by 9.3 per cent year-on-year to reach 37.7 million bales in FY 2017-18. The total area under cultivation of cotton in India is expected to increase by 7 per cent to 11.3 million hectares in 2017-18, on account of expectations of better returns from rising prices and improved crop yields during the year 2016-17.Cotton prices remained volatile through the year impacting the profitability of the industry. However, Government of India has announced the Minimum Support Price to be at least 50% higher than the cost of production which could lead to strengthening of cotton price. Also, decreasing parity for imported cotton is likely to drive year-end inventory to a relatively tight position of less than 30 lakh bales and can keep the cotton prices at elevated levels.

India''s cotton yarn exports have witnessed a positive growth after three consecutive years. In 2017-18, India''s cotton yarn exports have totaled US$ 33.67 Billion with a growth of 2.5%. Cotton yarn commodity takes 48% share from total cotton exports of India. Exports to China have dropped, but it has still managed to remain the top importer for India''s cotton yarn. Bangladesh which is the second top most market increased its export value by 15.1%.

India Ratings and Research has maintained a stable outlook for cotton textiles and synthetics for fiscal 2018-19 as margins may expand due to softening in cotton prices, better consumer spending outlook and the low base effect of the last fiscal. However, the possible impact of pink bollworm on cotton and rising crude prices on synthetics are the constraints. Better margins, modest reduction in working capital requirements and subdued capital expenditure in the next fiscal will lead to an improvement in the overall credit profile in India.

The Indian government has come up with a number of export promotion policies for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector under the automatic route. The industry (including dyed and printed) attracted Foreign Direct Investment (FDI) worth US$ 2.82 billion during April 2000 to December 2017.

The Central Govt earmarked Rs 690 crore (US$ 106.58 million)for setting up 21 ready made garment manufacturing units in seven states for development and modernization of Indian Textile Sector. The revised rates for incentives under the Merchandise Exports from India Scheme (MEIS) for two subsectors of Textiles Industry - Readymade garments and Made ups - from 2 per cent to 4 per cent. The Government of India has taken several measures including Amended Technology Up-gradation Fund Scheme (A-TUFS), launch of India Handloom Brand and integrated scheme for development of silk industry, for the strategic enhancement of Indian textiles quality to international standards.

China''s slow investment in textiles and shift to high tech industries will have a positive impact on Indian exports in the coming years. Further, USA''s withdrawal from Trans-Pacific Partnership (TPP) and chances of termination of North American Free Trade Agreement (NAFTA) between USA - Canada - Mexico for free trade will increase their cost due to application of import duties amongst their countries. Consequently, Indian industry should have opportunity to promote its own exports.

Post GST, import duty has come down sharply, thus making imports cheaper for the domestic industry imports from China, Indonesia, Thailand and Bangladesh which has placed pressure on selling prices for the textile industry as a whole. Downward revision in duty drawback rates in general has added to the woes of the Indian Textile sector. The poor global retail sales and slow down of business in the domestic market, are matters of concern for the industry

An increasing crude price is likely to narrow the spread between cotton and synthetic yarns, thereby moderating the pace of switch to synthetics from cotton textiles. Operating margins of synthetics manufacturers may witness volatile margins due to fluctuations in crude price and delays in passing on cost inflation.

Uncertainties in global textile market regarding yarn prices, fluctuation in foreign currencies, disturbed countries crisis etc. leads to affect cotton procurement, product pricing, decline in demand & customer base. Additional tax levies in different forms may also affect profitability.

Your Company is persistently working hard to face such challenges by cost reduction, process improvements, minimizing wastage and improving productivity & quality in proximity to mitigate the growing cost pressure in our overall operations. We are moving ahead through our result oriented strategies for future sustainability & development.

FINANCIALANALYSIS

Production/Sales Review

During the year under review, the company achieved production of 44703 M.T. of Cotton/Synthetic Yarn against previous year production of 43248 M.T. showing an increase of about 3.36%. The company achieved a gross revenue/operating income of Rs. 105467.42 Lakhs (including exports/export incentives Rs. 1667.62 Lakhs) as compared to Rs. 101552.73 Lakhs (including exports/export incentives Rs. 1911.81 Lakhs) in the previous year showing a growth of about 3.85%.The value of the exports remained at the same level.

Profitability

The company achieved Gross Profit (Profit before depreciation, interest and income tax) of Rs.11420.20 Lakhs with ratio of 10.82% during FY 2017-18 as compared to Rs. 13255.90 Lakhs in the previous FY 2016-17 with ratio of 13.05% which has declined in FY 2017-18 due to decrease in price of finished product in H1 of FY 2017-18.The financial interest cost declined to Rs. 2904.77 Lakhs as compared to Rs. 4011.06 Lakhs in the previous year due to reduction in the interest of term loan borrowings and working capital borrowings as well as repayments of Term Loan installments.The company earned gross cash profit before tax ofRs. 8515.43 Lakhs against Rs. 9244.84 Lakhs in the previous year and cash profit after tax of Rs.7543.23 Lakhs against Rs.7952.03 Lakhs in the previous year. The profit before tax of Rs.2888.04 Lakhs as compared to previous year of Rs. 3470.98 Lakhs. After providing for current tax of Rs. 1745.48 Lakhs [Previous year Rs. 2030.81 Lakhs], Prior Period Tax of Rs. -148.28 Lakhs (Previous Year Rs. 60.00 Lakhs) Deferred tax liabilities of Rs. - 625.00 Lakhs (Previous Year Rs. -798.00 Lakhs) therewas a net profit after tax of Rs. 1915.84 Lakhs against previous year net profit after tax of Rs. 2178.17 Lakhs.

Total Other Comprehensive Income (Net of tax of Rs. -8.83 Lakhs) for current financial year Rs. 16.69 Lakhs as compare to Rs. -4.25 Lakhs (Net of tax of Rs 2.25 Lakhs) in previous financial and the net profit after tax and comprehensive income of Rs.1932.53 Lakhs as compare to Rs. 2173.92 Lakhs in previous year .

RESOURCE UTILISATION

Property, Plant & Equipment

The net Block Property, Plant and Equipment/ Capital work in Progress as at 31st March, 2018 was Rs. 31668.99 Lakhs as compared to Rs. 34785.16 Lakhs in the previous year.

Current Assets and Current Liabilities

The current assets as on 31st March 2018 were Rs. 48266.50 Lakhs as against Rs. 51020.91 Lakhs in the previous year. Inventory level was at Rs. 28134.57 Lakhs as compared to the previous year level of Rs. 30258.30 Lakhs. Trade Receivables level was at Rs. 13169.56 Lakhs (including Bill discounted/Negotiated FC/INR of Rs. 4574.03 Lakhs) as compared to the previous year level of Rs. 15353.78 Lakhs (including bill discounted/Negotiated FC/INR of Rs. 9573.14 Lakhs). The current liabilities as on 31st March 2018 were Rs. 44496.25 Lakhs as against Rs. 46363.70 Lakhs in the previous year. Trade payable level was at Rs. 3774.70 Lakhs as compare to the previous year level of Rs. 2143.45 Lakhs.

LIQUIDITY & CAPITAL RESOURCES

The position of liquidity and capital resources is given below:

(Rupees in Lakhs)

Particulars	2017-18	2016-17
Cash & Cash Equivalents
Beginning of the year	52.06	298.63
End of the year	80.89	52.06
Net Cash provided/ (used) by:
Operating Activities	13860.18	11090.10
Investing Activities	-3692.85	-488.79
Financial Activities	-10138.50	-10847.88

The company is utilizing cash accruals for meeting term loans repayment commitments, acquisition of balancing equipments/fixed assets and improvement of net working capital funds

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has internal audit department to oversee internal control systems and procedures to ensure efficiency of decisions for optimum utilization and protection of resources and compliance with applicable statutory laws and regulations and internal policies. Reports are submitted by the internal auditor to the Audit Committee of the Board and necessary action/recommendation are made there after by the said committee. Continuous efforts are being made to further improve and strengthen the internal control systems.

HUMAN RESOURCES / INDUSTRIAL RELATIONS

The company recognizes its human resources as its most valuable asset and takes pride in the commitment, competence and dedication shown by its employees in all areas of business. The Company has specialized professionals in the respective fields to take care of its operations and allied activities. The Company is committed to nurturing, enhancing and retaining the top talent through superior learning. This is critical pillar to support the organization''s growth and its sustainability in the long run. During the year under review, the company enjoyed cordial relationship with workers and employees at all levels.

3. CREDIT RATING

The ICRA has reaffirmed the rating "BBB " (pronounced ICRA Triple B plus) for long term borrowings and "A2" (pronounced ICRA A two) for short term borrowings, respectively on the basis of Audited Balance Sheet of FY 2017-18. Management believes that the Company''s liquidity and capital resources should be sufficient to meet its expected working capital needs and other anticipated cash requirements

4. DIVIDEND

No dividend was declared by the company for FY 2017-18. The provisions of Section 125(2) of the Companies Act, 2013 relating to Transfer of Unclaimed Dividend to Investor Education and Protection Fund do not apply as there was no dividend declared and paid by the company in the past 10 years.

5. SHARE CAPITAL

The paid up Equity Share Capital as at 31st March, 2018 stood at Rs. 341.30 Lakhs (Rs. 356.10 Lakhs minus Calls in Arrears of Rs. 14.80 Lakhs) divided into 3561000 Equity Shares of the face value of Rs. 10/- each which forms a part of Equity Share Capital as per Ind AS while the paid up Redeemable Preference Shares Capital as at 31st March 2018 stood at Rs. 8.52 Crores divided into 8516200 Preference Shares of Rs. 10/- each at premium, which forms a part of other Equity( Equity components of compound Financial instruments) / Borrowing (Non-current) (liability components of compound financial instrument) as per Ind AS. During the year under review, the Company has not issued any equity shares with differential voting rights nor has granted any stock options or sweat equity. As on 31st March, 2018 none of the Directors of the Company hold instruments convertible into equity shares of the Company.

6. SUBSIDIARY/ASSOCIATE/JOINT VENTURE COMPANIES

The Company does not have any subsidiary /associate/joint venture companies.

7. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

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

8. CORPORATE SOCIAL RESPONSIBILITY (CSR)

As per the provisions of section 135 of the Companies Act, 2013 every company having net worth of rupees five hundred crore or more or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year is required to spend in every financial year at least 2% of the average net profits made during the three immediate preceding financial years on CSR activities.

The disclosure relating to the CSR activities pursuant to section 134(3) of the Companies Act, 2013 read with Rule 9 of the Companies (Accounts) Rules, 2014 and Companies (Corporate Social Responsibility) Rules, 2014, is annexed hereto as "Annexure A" and forms part of this Report.

9. BUSINESS RISK MANAGEMENT

The Board of Directors in their meeting has formulated Risk Management Policy of the Company. The aim of Risk Management policy is to maximize opportunities in all activities and to minimize adversity. The policy includes identifying type of risks and its assessment, risk handling, monitoring and reporting, which in the opinion of the Board may threaten the existence of the Company. The Risk Management policy may be accessed on the Company''s website.

10. RELATED PARTY TRANSACTIONS

All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. During the year, the Company had not entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with the provisions of Regulation 23 of the SEBI(Listing Obligations and Disclosure Requirements)Regulations, 2015. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable.

The Policy on dealing with related party transactions as approved by the Board maybe accessed on the Company''s website at the link:http://sportking.co.in/public/pdf/1520571645Policy%20on%20Ma.pdf

11. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The company has not given any loans, guarantees or made investments under the provisions of Section 186 of the Companies Act, 2013.

12. DIRECTORS

In accordance with the provision of Section 152 of the Companies Act, 2013, Sh. Naresh Kumar Jain (DIN: 00254045), Executive Director of the company, is liable to retire by rotation at the forthcoming Annual General Meeting and being eligible offers himself for re-appointment.

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 under regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

AUDIT COMMITTEE

The Company has an Audit Committee of the Board of Directors, the members of which are Sh. Prashant Kochhar, Smt. Harbhajan Kaur Bal and Sh. Sunil Puri. Sh. Prashant Kochhar is the Chairman of the committee.

The committee is empowered to look into all the matters related to finance and accounting and its terms of reference are as per regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with section 177 of The Companies Act, 2013.

NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE

During the year under review, Six Board Meetings and Four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit and Nomination & Remuneration Committees. The performance evaluation of the independent directors was completed. The performance evaluation of the Managing Directors and Non - Independent Directors were carried out by the independent directors. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

NOMINATION AND REMUNERATION POLICY

The Board of the directors has constituted Nomination and Remuneration Committee who has framed a policy in relation to the remuneration of Directors, Key Managerial Personnel and Senior Management of the Company and the criteria for their selection and appointment which is stated in the Corporate Governance Report.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

Pursuant to Section 177(9-10) of the Companies Act, 2013 and regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company has formulated a whistle blower policy for vigil mechanism for directors and employees reporting for unethical behavior, fraud and mismanagement or violation of Company''s code of conduct. The details of the Policy are also posted on the website of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:

i) In the preparation of the annual accounts, the applicable accounting standards had been followed.

ii) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reason able and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year ended on 31st March, 2018.

iii) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. iv) The directors had prepared the annual accounts on a going concern basis.

v The directors had laid down internal financial controls to be followed by the company and that such internal financial controls were adequate and were operating effectively. vi) The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

13. AUDITORS AND THEIR REPORT

STATUTORY AUDITORS

At the 28th Annual General Meeting held on 9th September, 2017, M/s. S.C. Vasudeva & Company, Chartered Accountants, (Firm Registration Number 000235N) were appointed as Statutory Auditors of the Company to hold office for a term of 5 (five) consecutive years and subsequently. They have changed their firm name to M/S SCV & Co which was subsequently converted to SCV & Co. LLP and disclosure in this regard was duly made by the company to Bombay Stock Exchange Limited in accordance with the provisions of Regulation 30 of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 amended time to time.

The Statutory Auditors of the Company have submitted Auditors'' Report on the accounts of the Company for the accounting year ended 31st March, 2018.There is no audit qualification reservations/ or adverse remarks or disclaimer in the said financial statements. The comments in the Auditors'' Report read with Notes to Accounts are self- explanatory and do not call for any further explanation. As per the amended provisions of Section 139 of the Companies Act, 2013, ratification of the appointment of statutory auditors by the shareholders of the Company is not required now.

SECRETARIAL AUDITORS

Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company appointed M/s B.K. Gupta & Associates, Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure B".

There is no audit qualification, reservations or adverse remarks or disclaimer in the secretarial audit report during the year under review.

COST AUDITORS

The Board of Directors has appointed M/s R.R. & Company, Cost Accountants, as the Cost Auditors of the Company to conduct Audit of the cost records of the company for the FY 2018-19. However, as per provisions of Section 148 of the Companies Act, 2013, read with Companies (Cost Records and Audit) Rules, 2014, the remuneration to be paid to the Cost Auditors is subject to ratification by members. Accordingly, the remuneration to be paid to M/s R.R & Company, Cost Accountants, for financial year 2018- 19 is placed for ratification before the members at the Annual General Meeting.

14. EXTRACT OF ANNUAL RETURN

The details of the Extract of the Annual Return (Form MGT-9) is given in "Annexure C" of this report.

15. LISTING OF SECURITIES

The fully paid up Equity Shares of company are listed on Bombay Stock Exchange (BSE) Limited for trading. The Company has also paid the listing fees to BSE for financial year 2018-19.

16. ENVIRONMENT AND SAFETY

The Company is conscious of importance of environment clean and safety operations. The company conducts operation in such a manner as to ensure safety of all concerned, compliances of environmental regulations and prevention of various natural resources. As required by the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, the Company has formulated and implemented a policy on prevention of sexual harassment at workplace with a mechanism of loading complaints. During the year under review, no complaints were reported to the board.

17. PUBLIC DEPOSITS:

The Company has not raised any deposits from the public except the interest free unsecured loan from the Promoter Director of the Company. Hence the provisions of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 with regard to acceptance of deposits from public are not attracted

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

The information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of the Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption and foreign exchange earnings & outgo is given in "Annexure-D" of this report.

19. PARTICULARS OF EMPLOYEES

The disclosures in respect of managerial remuneration as required under Section 197(12) read with Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 and statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in Rule 5 (2) and 5 (3) Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is given in "Annexure E" of this report.

20. PREVENTION OF INSIDER TRADING:

In January 2015, SEBI notified the SEBI (Prohibition of insider trading) Regulations, 2015 which came into effect from May 15, 2015. Pursuant thereto, the Company has formulated and adopted a new Code for Prevention of Insider Trading. The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company''s shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.

All Directors and the designated employees have confirmed compliance with the Code.

21. CODE OF CONDUCT:

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all Senior Manager Personnel in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviors of any form and the Board has laid down the directives to counter such acts. The Code has been posted on the Company''s website.

The Code lays down the standard procedure of business conduct which is expected to be followed by the directors and all Senior Manager Personnel in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders.

22. CORPORATE GOVERNANCE

The Corporate Governance, which forms an integral part of this Report, are set out as separate Annexure, together with the Certificate from the auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in regulation 27 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

23. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the co-operation from the Bankers, Financial Institutions and Government Bodies & Business Associates. Your Directors also record their appreciation of the services rendered by the employees of the company.

By Order of the Board

(Raj Kumar Avasthi)

Place: Ludhiana Chairman

Date: 31.08.2018 DIN: 01041890

Regd. Office:

5/69, Guru Mansion, 1st Floor,

Padam Singh Road, Karol Bagh,

New Delhi - 110005

---

Mar 31, 2014

Dear Members,

The Directors of your company are pleased to present their Twenty Fifth Annual Report on the affairs of the company together with Audited Accounts of the Company for the year ended 31st March, 2014.

1. FINANCIAL RESULTS

The summarized financial results for the year are as under:

Particulars 2013-14 2012-13

(Rs. in Crores)

Gross Turnover/Operating Income 1067.29 861.65

Profit before Interest, Depreciation & 170.91 136.86 Taxation

Less Interest (Net) 81.25 71.31

Profit before Depreciation & Taxation 89.66 65.55

Less: Depreciation 46.63 40.87

Net Profit before Taxation 43.03 24.68

Less Current Tax {Net of MAT Credit of

Rs. 9.02 crs.(Previous Year Rs. 5.05 Crs.) - -

Deferred Tax 15.59 (7.50)

Net Profit afterTax 27.44 32.17

Add: Surplus of Last Year 57.94 26.20

Less: Transfer to Capital Redemption Reserve 0.43 0.43

Surplus carried to Balance Sheet 84.95 57.94

3. DIRECTORS

According to the erstwhile provisions of the Companies Act, 1956 Sh. Ajay Chaudhry & Sh. Sunil Puri are liable to retire by rotation at this annual general meeting of the company but pursuant to the provisions of section 149 and schedule IV of the Companies Act, 2013 they as well as Dr. (Mrs.) Harbhajan Kaur Bal are being appointed as an Independent Directors of the Company.

4. DIRECTORS' RESPONSIBILITY STATEMENT

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

i) In the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

ii) appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2014 and the profit of the Company for the year ended 31st March 2014.

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

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

5. AUDIT COMMITTEE

The Company has an Audit Committee of the Board of Directors, the members of which are Mr. Ajay Chaudhry, Dr. (Mrs.) H K Bal and Mr. Sunil Puri. Mr. Ajay Chaudhry is the Chairman of the committee. The committee is empowered to look into all the matters related to finance and accounting and its terms of reference are as per Clause 49 of the listing agreement read with section 177 of The Companies Act, 2013.

6. RISK MANAGEMENT - MANAGEMENT PERCEPTION

The textile business, like other businesses, is susceptible to various risks. The primary risk factor is raw material prices, mainly raw cotton and synthetic fibre, which is the largest component of cost. Since cotton is an agriculture produce, it suffers from climatic volatility in the major cotton producing countries the prices of synthetic fibre are based on the prices of petroleum products in the international market. This is turn creates uncertainties for textile manufacturers.

Another important issue is the availability, quality and price of power. The availability of good quality power at reasonable prices is critical for sustainability of the industry. However, the cost of power has been continuously increasing. The non-availability of skilled manpower along with high labour cost prevailing in the country is growing concern area for textile industry.

We are making all efforts to cope up with the challenges through continuous cost reduction, process improvements, diversification of products, training the workforce on the continued basis, and creating a stronger customer oriented approach.

7. AUDITORS

M/s. Rawla & Company, Chartered Accountants, New Delhi, Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received letters from them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment.

8. AUDITORS' REPORT

The comments in the Auditors' Report read with Notes to Accounts are self explanatory and do not call for any further explanation.

9. PUBLIC DEPOSITS

The Company has not raised any deposits from the public except the interest free unsecured loan from Directors of the Company. Hence the provisions of Section 58A of the Companies Act, 1956 / Section 73 of the Companies Act, 2013 and the rules made under Companies (Acceptance of Deposits) Rules, 2014 with regard to the deposits accepted from the public are not attracted.

10. LISTING OF SECURITIES

The securities of the company are listed on The Delhi Stock Exchange Ltd., New Delhi, The Ludhiana Stock Exchange Ltd., Ludhiana, The Ahmedabad Stock Exchange Ltd., Ahmedabad and The Madhya Pradesh Stock Exchange Ltd., Indore and the company has already paid listing fees of the stock exchanges for the financial year 2014-15. Since these regional stock exchanges are not fulfilling the eligiblity criteria as per SEBI Guidlines,the company is planning to go for Direct Listing on the other recognised stock exchange.

11. PARTICULARS OF EMPLOYEES

The information as required by the provision of the Section 217(2A) of the Companies Act,1956 read with Companies (Particulars of Employees) Rules,1975 is annexed hereto and forms part of this report.

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

The information as required by the provisions of the Section 217 (1) (e) of the Companies Act 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto and forms part of this Report.

13. CORPORATE GOVERNANCE

A separate report on Corporate Governance along with Auditors' Certificate is attached.

14. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the co-operation from the Bankers, Financial Institutions and Government Bodies & Business Associates. Your Directors also record their appreciation of the services rendered by the employees of the company.

By Order of the Board

Raj Kumar Avasthi Place : Ludhiana Chairman Date : August 14,2014 DIN:- 01041890

Regd. Office : 5/69, Guru Mansion, 1st Floor, Padam Singh Road, Karol Bagh, New Delhi - 110005

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Mar 31, 2013

Dear Member,

The Directors of yOur company are pleased to present their Twenty Fourth Annual Report on the affairs of the company together with Audited Accounts of the Company for the year ended 3',si March. 2013.

1. FINANCIAL RESULTS

The summarized financial results for the year areas under:

(Rs. in Crores)

Particulars 2012-13 2011-12

Gross Trunover Income 861.65 763.30

Profit before interest .depreciation & Taxation 136.86 62.57

Leu Interest (Net) 70.76 52.07

Profit before depreciation & Taxation 66.10 10.50

Less : Depreciation 40.88 25.81

Net profit before Taxation 25.22 15.31

Less: Provision forcurrent taxes 0.54 -0.02

Net Profit after current Taxes 24.88 (-) 15.23

Add: provision for deferred tax assets ( ) /Liabilities (-) 7.50 (-)10.73

Net profit after deferred taxation 32.10 (-)26.08

add: surplus of last year 26.19 52.63

Less. Transfer to Capital redemption reserve 0.43 0.43

Surplus carried to Balance sheet 57.84 26.18

2. MANAGEMENTS DISCUSSION AND ANALYSIS BUSINESS REVIEW ;

Global economic outlook has been improving and expected to grow above 3% in the ycar2013and4% in the year 2D14, though the growh i$ not uniform even among the developed countries. Private demand in USA has been growing giving stranglh to the recovery but similar indications are missing m EU. The driver of Uie devc'opod countries' growth is manly monetary easing which needs to be substituted with more fundamental forces to make it s ustai noble. The emerging economies especially in Asia are likely to grow sy 7% for next couple of years, which is lass than the g rowth rate achieved in the past. If is mainly dueto some slowdown m export sector of the leading economies like China end partially duo to the China's efforts to re-balance economy towards domestic consumption side. It is expected that such a move would strengthen the gnowlhfeKports of emerging economies in coming years.

The 12th Five Year plan of India targeis a growth rate of 9.6% for the manufacturing sector. The National Manufseluring Plan targets ar increase in manufaclurlng sector growth to 12-14% over die medium term. The mean, value of different GDP growth estimates of Indian economy shows that Indian economy may grow in the range of 5-6% in financial year 2013-14 The stubborn current account deficit, fiscal deficit and a lackluster performance gf manufacturing Sector especially catering to exports are some factors affecting the business climate and investor confidence mi (ho country adversely. Since the Textile Sector contributes about 12 par cent ol 1tie manufscluring Output, the growth oflhis sector is crucial to the realization of targets 'elating to total outpul and employ merit growth.

COTTON

During 2012-13. the International cotton prices benefited radically from me policies of the Chinese Government ft must be borne m mind that a large part of world cotton stocks are in the hands of the Chinese government. Though the future Chinese policies remain unclear, but it dees nut seem that the reserve cotton will be released in quantities large enough to significantly undermine domestic Chinese puces or intemstignsfl cotton prices. In 2012-13, global cotton produclxm is estimated at 26.4 million tons, down by 5%, while cotton mill use Is expected lo rise by 6% With consumplion anticipated at 23 $ milhon tons, Ihe global Slocks at the end of July 2013 are forecast at a record 17.9 million tons, up 19% from the3previous year In 2013-14, world area under cotton cultivation is likely to drop by 5-6% due to better prices available to farmers against alternative crop Globally, the cotton production is eslmated at around 25.5 millon Ions against consumption of about 24. S million tons The major increase in stock will happen in China whereas the world stock minus China is likely to be reduced.

The cation production in India in the current season (October- September) is estimeled to be around 34 million bales. The exports of cotton are estimated at 10 mil .ion bales as compared to 12.9 million bates in 2011-12. Domestic consumption of cotton ncreased by 13% as compared to test year Consequently, the closing slock of cotton is expected to gei substantially reduced. In 2013 14, it is anticipated that ttie area Lnder cotton cultivation in me country will reduce by around 6% again due to better margins in alternative crops. However, with, the lorecas' of normal end on time monsoons the ytefd is likely to be better than ihe year 2012-13.

COTTON YARN

Cotton yarn production in India increased by about 14% during the year 2012-13 Most Indian yarn manufacturers experienced high demand from domestic as well as export market, mainly from China, during 1be financial yea' 2012-13. Favorable policy environment, impraved demand supply position and favorable input costs were sonne of me aimer driving factors that led to improvements in margins. With lower Cotton prices, depreciating rupee, SlOw but steady pick up in domestic demand and continued demand of colton yam from China, yarn manufacturers expect to maintain their margins in Ihe coming quarters. Also, Fcieigr Direct Investmenl m multi brand retail is an opportunity that would unleash demand in Ihe long run

The Central Governmeni has also extended the benefits of Technology Upgradalion Fund Scheme for the 12th Five Year Plan of (2012-17) and envisaged a capital investment Of Fts- 144 &92 entires in the textile value chain activities during this period out of which capital investment of Rs. 41750 crates have been envisaged for spinning sector

EXPORTS

The textiles industry accounts tor nearly 11% share of Ihe country's total exports basket. Exports of Textiles 5 Clothing grew from USD 21.22 billion in 2098-09 to USD 22.41 billion in 2009-10 and have touched USD 27 47 billion ir 2910-11. In Ihe financial year 2011-12 (P). exports of textiles and clothing, has grown by 20 05% over Ihe financial year 2010-11 to touch USD31.31 billon in rupee/US$lenms, experts of readymade garmenls wifriessed the highest export share (39%) tollowed by Cotton Textiles (33%), and Man- Made Textiles (17%) during 2912-13 (April- December). Indy's textiles and dolnmg industry is also one of the largest contribut.ng sectors of I nd a's exports worldwide. The report or Working Group constituted by the Planning Commission on boosting India's manufactumg exports dunng 12th Five Year Plan (2012-17), envisages India's exports of Textiles and Clothmg at USD 64.11 billon by the end of March 2017

FINANCIAL ANALYSIS

PRODUCTION / SALES REVIEW

During the year under revew. your company achieved a production of 36364 MT of ooitonteyniheiic yam as compared to 29479 MT in the previous year showing an increase of about 39%. THE company ach.evad a gross tomtiverfoperatmg income of Fts Rtil 65 Crcres as compared to Rs. 763.39 Crores n Ihe previous year shewing a growth of about 12 96% The experts increased to Rs. 373.81 Crcres against Rs. 325.05 C i ores In the previous year showimg a growth of about 11.90%. The Company is recognized as 'Trading House' by Govt, of India.

PROFITABILITY

The company earned a gross profit of Rs. 136.BS Crcres having protitabilily.'sa ratio at 15 B-S % as compared to Rs. 62.67 Crones having profitability/ pates ratio of 819% In the previous year which has improved substantially with stable business environment and due tti better realisal(ons, procurement of raw cotton at the appropriate price, purchase of power at lower price under open access etc.

The -merest cost increased to Rs. 73 76 Crones as compared to Rs, 52 07 Crares in the previous year due to increase in interest rates and increased borrowings with the increased level of operations. The company earned gross cash profit bf Rs. 66.1(3 Crcres agansi cash profit of Rs. 19.50 Ogres in the previous year. After making provision of deprecation of Rs. 46.66 Crcres (Previous Year Rs 25.31 Crones), Income Tax cf Rs. 0.54 Cranes (Previous Year Rs - 0.02 Crones). and after providing for deferred tax assets of Rs. 7 50 Cfores (Previous Year Rs [-J10.79 Crates) there was a net prolil of Rs 32.1B Crwes against previous year net loss of Rs. 26.08- Crones After transfer of,Re. 0,43 Crores to Capital Redempfion R eserve, the su rplus n Lne Pro fit 4 Loss Appropriation Account stands at Rs. 57.S4 Crores

RESOURCE UTILISATION :

Fixed Assets

The Net Fixed Assels ( nclucmg wqii- n-progress] as at 31st March. 2013 were Rs 431.00 Crores as compared to Rs 400 05 Crones in the previous year as the company has completed a major part of Drown field project of 6153C spmdtes at Batfnnda.

Current Assets and Current Liabilities

The inventory level increased by Rs. 19 99Cngnes from Rs. 173.89 Crones at the end of the previous year lo Rs 193 80 Crores at the end or the year under review. The Sundry Debtors level decreased lo Rs 7fl 10 C rpres at the end Of Current year tfom Rs. 88.29 Crores aLtheend Of previous yearwhilprhe level of other current assets increased to Rs. -66 82 Ctores at the end at current year from Rs 44.,99 Crores at the end of previous year due to increased level of operations. The level of trade payablesrshort term borcowlngstother current liabilities end provisions has decreased to Rs. 393.79 Crs at the end of current year From Rs 437 07 Crs a1 the end of previous year, (hus improving the net working cap 1al position gf the company

LIQUIDITY S CAPITAL RESOURCES:

I he position of liquidity and capital resources is given below:

(Rs. in crores)

Particular 2012-13 2011-12

Cash & Cash Equivalents:

Beginning of the year 9.64 4.73

End of me year 9.26 9.64

Net Cash provided (used) by:

Operating Activities 61.91 70.33

investing Activities (67.50) (150.91)

Financial Activities 3.21 82.49

The company is utilizing cash accruals for meeting term loan commitments and acquisition of fixed assets

EXPANSION PROJECT

So far 40430 spindles have been commissioned out of the company's brownfield expansion project of 61536 spindles at Rathinda for manu.factuie of polyester cotton bierfoedfccmpati cotton yarn and the ^stalled capacity at the Company has increased to 1.79 Lacs soil'd es as on dale from 1.55 Lacs spindles as anaist March 2612 The implements on of tie balance 13056 spindles of the expansidr. project alongwiih additional 19534 spndles at a additional cosi of Rs 63.52 crores for the manufedure of compact cotton yam is at the final stage winch is expected to be commissioned m the current F Y 2913-14

INTERNAL CONTROL SYSTEM

The company has internal audit department to oversee internal control systems and procedures to ensu re efficiency of decisions for optimum utilizaLicn and protection of resources and compliance with applicable statutory laws and regulations and interna' policies. Quarterly reports are- submitted by the ntemal auditor to the Audit Committee erf the Board and necessary action recommendation are made thereafter by the said committee. Continuous efforts are being made lo further strengthen the internal oonlrel systems.

MATERIAL DEVELOPMENTS IN HUMAN

Resources r industrial relations

The Company recognizes its human resources as its most valuable asset The Company has specialized professionals in the respective fields to take care of its operations and allied activities. The company recognizes the whole headed contribution by its committed worn force in bringing the Company to its present position The Company is employing over 3700 parsons. The Industrial Relations continues to be cordial.

3. DIRECTORS

Mr Raj Kumar Avaslhi Chairman curw Managing Director and Sin Mumsb Avasthi Managing Director of the company, retire by rotation at trie ensuing Annual General Meeting of the company and being eligible offer themselves for reappointment.

4. DIRECTORS' RESPONSIBILITY STATEMENT

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

i) In the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

ii) appropriate accounting policies have been selected and applied consistently, and naive made judgments end estimates that arc reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 st March 2013 and the loss of the Company for the year ended on 31st March 2013.

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

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

5. AUDIT COMMITTEE

The Company has an Audit Committee of the Board of Directors, the members of which are Mr. Ajay Chaudhry, Dr. (Mrs) H. K. Bal and Mr. Sunil Pun, Mr, Ajay Chaudhry Is the Chairman of the comm,ties. The committee is empowered to look into al the matters related to finance and accounting and its terms of reference are as per Clause 49(H) of the listing agreement read with section 292A of The Compnies Act, 1956.

6. RISK MANAGEMENT - MANAGEMENT PERCEPTION

The textile business, like other businesses, is susceptible to various risks The primary risk factor is raw malerial prices, mainly raw cotton end synthetic fibre, which is the largest component of cost Since cotton is an agriculture produce, it suffers from climatic volatility in the major cotton producing countries the prices of synthetic fibre are based on the prices of petroleum products m the miemetionai market. This is turn creates uncertainties for textile manufacturers

Another important issue is the availability, quality and price of power The evailability of good qualily power al reasonable prices is critical Tor suslainahility of the industry However, the cost of power has been continuously increasing The non-availability of skilled manpower along with high labour cost prevailing in the counlry is growing concern area for textile industry.

Wo are making all efforts to cope up with the challenges through continuous cost reduction, process Improvements, diversification of products, training the workforce on the continued basis, and creating a stronger customer onented approach.

7. AUDITORS

M/s Rawla & Company, Chartered Accountants. New Delhi, being the auditors erf the Company retire at the forthcomeig Annual General Meeting of the Company and being eligible olfer themselves for re- appointment.

8. AUDITORS' REPORT

The comments in the Auditors' Report read with Notes to Accounts are self explanatory and do not call for any further explanation.

9. COST AUDITORS

The board of director^ has appointed Mis R.R. & Co., Cost Accountants, Ludhiana as the Cost Auditors of the Company under Section 233B of the Companies Act, 1956 read with Cost Audit Rules, 20H for the year 2013-14. The Cost Auditors' Report lor the financial year2012-13 will be forwarded to the Central Government as required under law.

10. PUBLIC DEPOSITS

The Company has not raised any deposits from the public except the interest free unsecured loan from Directors of the Company. Hence the provisions of Section 58A of the Companies Act 1956 and the rules made under Companies (Acceptance of Deposits})Rules, 1975 with regard to the deposits accepted from the public are not attracted

11- LISTING OF SECURITIES

The securities of the company are luted or The Delhi Stock Exchange Ltd., New Delhi, The Ludhiana Stock Exchange Ltd., Ludhiana. The Ahmedebed Stock Exchange Ltd., Ahmedabad and The Madbya Pradesh Stock Exchange Ltd Indore and the company has ebeedy paid listing fees of the stock exchanges for the financial year 2013-14

12, PARTICULARS OF EMPLOYEES

No employee is covered under ihe provisions of Section 217 (2A) of the Companies Acl 1B5B read with Companies (Particulars of Employees) Rules, 1975.

13, PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information as requ red by the provisions of the Section 217 [1} (a) of the Companies Act 19S6 read with the Companies (Disclosure of particulars in Ihe Report of (hE Board or Directors) Rules 1988 is annexed fierelo and forms part of this Report

14. CORPORATE GOVERNANCE

A separate report on Corporate Governance eking with Auditors' Certificate is eilechetf.

15. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of me co-operation from Vie Bankers. Financial Instnulions and Government Bodies & Bus ness Associates Your D rectors also record their apprecahon of the services remdered by the employees of the company

By Order of the Board

Place : Ludhiana Raj Kumar Avasthi

Date ; September 1,2013 Chairman

Regd, Office: S/69, Guru Mansion, 1st Floor, Padam Singh Road, Karol Baijh, New Delhi - 110005

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Mar 31, 2012

Dear Members,

The Directors of your company are pleased to present their Twenty Third Annual Report on the affairs of the company together with Audited Accounts of the Company for the year ended 31st March, 2012.

1. FINANCIAL RESULTS

The summarized financial results for the year are as under:

(Rs. in Crores)

Particulars 2011-12 2010-11

Gross Tumover/Operating income 767.73 418.95

Profit before Interest, Depreciation & 58.79 72.81 Taxation

Less interest (Net) 48.29 14.37

Profit before Depreciation & Taxation 10.50 58.44

Less: Depreciation 25.81 13.90

Net Profit before Taxation -15.31 44.54



Less: Provision for Current Taxes -0.02 11.96

Net Profit after Current Taxes -15.29 32.58

Add: Provision for Deferred Tax Assets -10.79 -3.38 ( ) /Liabilities (-)

Net Profit after Deferred Taxation -26.08 29.20

Add: Surplus of Last Year 52.70 23.78

Less: Transfer to Capital Redemption 0.42 0.28 Reserve

Surplus carried to Balance Sheet 2620 52.70

2. MANAGEMENTS DISCUSSION AND ANALYSIS BUSINESS REVIEW:

The economic slowdown in EU and USA has forced emerging economies to struggle for growth after experiencing weak performance in the FY 2010-11 and up to first half of FY 2011-12. Moreover, these tough economic conditions have not been compensated by surge in domestic demand in emerging economies.

So, the emerging and developing economies are expecting lower growth in the near future. India is also projected to grow in the range of 6% - 7% respectively due to major issues in EU and its banking system. In addition to global pressures on Indian economic performance, structural problems related to infrastructure, lower productivity levels and lack of policy reforms are other major concern areas. Moreover, higher inflationary pressures are also resulting in tighter monetary policies thereby restricting the industrial growth in India.

COTTON

The global cotton price which is largely a function of global demand and supply of cotton has been influenced by factors other than actual user demand and overall supply of cotton in 2011-12. The Chinese policy of accumulating cotton for strategic reserves and occasional policy decisions of Indian Government in relation to export of cotton has caused much volatility in cotton prices. The global cotton production is estimated at 27.16 million tons in 2011-12, which is expected to decline to 24.9 million tons in 2012-13 due to lower area under cotton cultivation in sync with moderation in global cotton prices to an extent. The 'global mill consumption of cotton is estimated at 22.7 million tons in 2011-12 and is projected to grow moderately in 2012-13.

YARN

Financial year 2011-12 was a year rampant with nervousness and unpredictability, which was not a conducive environment for business. The ban on the exports of cotton yarn in January, 2011 seriously impacted the industry and there was accumulation of inventory till end of March, 2011. The Government announced its new policy on export of Cotton Yarn in first week of April, 2011 and yarn export was brought under Open General Licence. As a result, the yam prices moved in a wide range for the first half of the year. Most of the textile mills, particularly which are predominantly spinning, suffered losses including losses incurred by the writing down of the stock of cotton and yarn in the first half of the FY 2011-12.

However, it was only in the second half that things showed some signs of stabilization. All India yarn production was lower by an estimated 15% due to (i) Power crisis in the South (ii) Huge inventory losses as referred above resulting in severe shortage of working capital availability to some companies (iii) Acute labour shortage across India (iv) Sharp fall in

yarn prices as compared to last year propelling voluntary cut in production. However, this year production is expected to increase even though margins are expected to be on the lower side only. There is also a noticeable trend of increasing value addition in products. The removal of trade barriers with Bangladesh is yet to show any impact on the Indian Industry.

Overall the year is expected to be more stable due to expectation that cotton will be much less volatile than last year. Growth of the industry will hinge on recovery in the global economy although Indian demand is expected to increase at a relatively moderate rate.

FINANCIAL ANALYSIS

Your directors are pleased to report performance of the business operations as follows:

PRODUCTION / SALES REVIEW

During the year under review, our company achieved a production of 29479 M.T. as compared to 20757 MT in the previous year showing an increase of about 42%. The company achieved a gross turnover/ operating income of Rs. 767.73 Crores as compared to Rs. 418.95 Crores in the previous year showing a growth of about 83 %. The exports increased to Rs. 322.50 Crores against Rs. 207.35 Crores in the previous year showing a growth of about 55 % owing better market penetration. The Company is recognized as Trading House' by Govt, of India.

PROFITABILITY

The company earned a gross profit of Rs. 58.79 Crores having profitability/sales ratio of 7.66 % as compared to Rs. 72.81 Crores having profitability/ sales ratio of 17.38 % in the previous year which has declined due to inventory losses with decrease in prices of raw cotton/cotton yarn during first half of the financial year 2011-12

The interest cost increased to Rs. 48.29 Crores as compared to Rs. 14.37 Crores In the previous year due to increase in interest rates and increased borrowings due to increased level of capacities/ operations. The company earned gross cash profit of Rs. 10.50 Crores against cash profit of Rs. 58.44 Crores in the previous year. After making provision of depreciation of Rs. 25.81 Crores (Previous Year Rs 13.90 Crores), Income Tax of Rs. (-)0.02 Crores (Previous Year Rs. 11.99 Crores), and after providing for deferred tax liability of Rs.10.79 Crores (Previous Year Rs. 3.38 Crores) there was a net loss of Rs. 26.08 Crores against previous year net profit of Rs. 29.20 Crores. After transfer of Rs.0.42 Crores to Capital Redemption Reserve, the surplus in the Profit & Loss Appropriation Account stands at Rs. 26.20 Crores.

RESOURCE UTILISATION:

Preferential Allotment

During the year, the company allotted 28,92,000,5% Redeemable Non Cumulative Preference Shares of Rs. 10/- each at premium of Rs. 90/- per share amounting to Rs. 28.92 Crs to the promoters and their associates to augment the long term resources of the company.

Fixed Assets

The Net Fixed Assets (including work-in-progress) as at 31st March, 2012 were Rs. 414.95 Crores as compared to Rs. 283.56 Crores in the previous year as the company has completed the greenfield project of 57600 spindles and a part of brownfield project of 61536 spindles with dye house at Bathinda.

Current Assets and Current Liabilities

The inventory level increased by Rs. 9.94 Crores from Rs. 163.95 Crores at the end of the previous year to Rs. 173.89 Crores at the end of the year under review. The Sundry Debtors level increased to Rs. 88.29 Crores at the end of current year from Rs. 45.73 Crores at the end of previous year while the level of other current assets increased to Rs. 44.99 Crores at the end of current year from Rs. 40.84 Crores at the end of previous year due to increased level of operations. The increased level of current assets has also been financed by increased trade payables/short term borrowings/other current liabilities and provisions of Rs. 437.07 Crs at the end of current year from Rs. 309.02 Crs at the end of previous year.

LIQUIDITY & CAPITAL RESOURCES:

The position of liquidity and capital resources is given below:

(Rs. in Crores)

Particulars 2011-12 2010-11

Cash & Cash Equivalents:

Beginning of the year 4.73 4.21

End of the year 9.64 4.73

Net Cash provided/ (used) by:

Operating Activities 79.33 62.91

Investing Activities (156.91) (176.41)

Financial Activities 82.49 114.02

The company is utilizing cash accruals for meeting term loan commitments and acquisition of fixed assets.

EXPANSION PROJECT

The Company's brownfield expansion project at Bathinda is underway for installation of 61536 spindles and a dye house for manufacture polyester cotton blended/cotton/meiange yarn. So far 48400 spindles have been installed / commissioned under this project and rest of the project is likely to be completed by March 2013. So the installed capacity of the Company has increased to 1.78 Lacs spindles as on date from 1.01 Lacs spindles as on 31st March 2011.

INTERNAL CONTROL SYSTEM

The company has internal audit department to oversee internal control systems and procedures to ensure efficiency of decisions for optimum utilization and protection of resources and compliance with applicable statutory laws and regulations and internal policies. Quarterly reports are submitted by the internal auditor to the Audit Committee of the Board and necessary action / recommendation are made thereafter by the said committee. Continuous efforts are being made to further strengthen the internal control systems. The company's main works at Ludhiana have been accredited with ISO-9001 from the concerned certification body DNV.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company recognizes its human resources as its most valuable asset. The Company has specialized professionals in the respective fields to take care of its operations and allied activities. The company recognizes the whole hearted contribution by its committed work force in bringing the Company to its present position. The Company is employing over 3000 persons. The Industrial Relations continues to be cordial.

3. DIRECTORS

Mr. Naresh Jain and Dr. (Mrs.) H. K Bal of the company, retire by rotation at the ensuing Annual General Meeting of the company and being eligible offer themselves for reappointment.

4. DIRECTORS' RESPONSIBILITY STATEMENT

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

i) In the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

ii) appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 st March 2012 and the loss of the Company for the year ended on 31st March 2012.

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

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

5. AUDIT COMMITTEE

The Company has an Audit Committee of the Board of Directors, the members of which are Mr. Ajay Chaudhry, Dr. (Mrs.) H K Bal and Mr. Sunil Puri, Mr. Ajay Chaudhry is the Chairman of the committee. The committee is empowered to look into all the matters related to finance and accounting and its terms of reference are as per Clause 49(ii) of the listing agreement read with section 292A of The Companies Act,1956.

6. RISK MANAGEMENT - MANAGEMENT PERCEPTION

The continued economic gloom, sharp drop in incomes and consumption in major consuming countries, uncertainties on when and to what extent economic recovery will take place and lack of trust and confidence in financial markets are major concern areas. The economic growth in our country, agriculture income, political and economic policies of new government will be few major influencing factors on textile industry's performance. The crude oil / raw cotton prices, foreign exchange rates, demand of cotton / synthetic yam in the international/ domestic market, employment generation and their disposable incomes levels etc. would be influencing factors on the margins of textile industry. Overall the uncertainties and risks are likely to moderate in the coming year.

7. AUDITORS

M/s. Rawla & Company, Chartered Accountants, New Delhi, being the auditors of the Company retire at the forthcoming Annual General Meeting of the Company and being eligible offer themselves for re- appointment.

8. AUDITORS' REPORT

The comments in the Auditors' Report read with Notes to Accounts are self explanatory and do not call for any further explanation.

9. PUBLIC DEPOSITS

The Company has not raised any deposits from the public. Hence the provisions of Section 58A of the Companies Act, 1956 and the rules made under Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public are not attracted.

10. LISTING OF SECURITIES

The securities of the company are listed on The Delhi Stock Exchange Ltd., New Delhi, The Ludhiana Stock Exchange Ltd., Ludhiana, The Ahmedabad Stock Exchange Ltd., Ahmedabad and The Madhya Pradesh Stock Exchange Ltd., Indore and the company has already paid listing fees of the stock exchanges for the financial year 2012-13.

11. PARTICULARS OF EMPLOYEES

No employee is covered under the provisions of Section 217 (2A) of the Companies Act 1956 read with Companies (Particulars of Employees) Rules, 1975.

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

The information as required by the provisions of the Section 217 (1) (e) of the Companies Act 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto and forms part of this Report.

13. CORPORATE GOVERNANCE

A separate report on Corporate Governance along with Auditors' Certificate is attached.

14. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation of the co-operation from the Bankers, Financial Institutions and Government Bodies & Business Associates. Your Directors also record their appreciation of the services rendered by the employees of the company.

By Order of the Board

Place : Ludhiana Raj Kumar Avasthi Date : September 1, 2012 Chairman

Regd. Office:

5/69, Guru Mansion, 1st Floor, Padam Singh Road, Karol Bagh, New Delhi -110005