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Directors Report of Vardhman Acrylics Ltd.

Mar 31, 2015

Dear Members,

The Directors of your Company have pleasure in presenting their Twenty-Fifth Annual Report together with the Audited Accounts of the Company for the Financial Year ended 31st March, 2015.

1. FINANCIAL RESULTS:

The Financial results for the year 2014-15 are as under:-

(Rs. in Lacs)

Particulars 2014-15 2013-14

Sales (Gross) 54,080.28 50,957.64

Other Income 1,615.73 2,063.31

Profit before Depreciation, 4,968.53 7,112.77

Interest & Tax (PBDIT)

Interest & Financial Charges 30.17 52.57

Profit before Depreciation & 4,938.36 7,060.20 Tax (PBDT)

Depreciation 476.87 1,136.76

Profit before Tax 4,461.49 5,923.44

Provision for Tax

- Current Tax 1,062.69 1,878.80

-Deferred Tax 56.49 (322.18)

- IT adjustment for earlier year - -

Profit After Tax (PAT) 3,342.31 4,366.82

Prior period adjustments (Net) 0.20 (0.15)

Balance brought forward 18,248.61 14084.57

Less: Premium on buy-back - 41.08 of shares

Less: Transfer to Capital - 161.85 Redemption Reserve

Less: Effect of change in 296.61 - depreciation as per Companies Act, 2013

Add: Impact of Deferred Tax due 102.65 - to change in Depreciation rate with regard to Companies Act, 2013

Appropriations:

Proposed Dividend on 930.08 - Equity Shares

Corporate Dividend Tax on 194.62 -

Proposed Dividend

Transfer to General Reserve 3,000.00 -

Balance carried to 17,272.06 18,248.61 Balance Sheet

Earnings per share (in Rs.) 3.59 4.69

Dividend per share (in Rs.) 1.00 -

2. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the Listing Agreement with Stock Exchange in India, is presented as under.

a) ACRYLIC FIBER INDUSTRY - GLOBAL AND INDIAN PERSPECTIVE:

In the year 2014, global Acrylic Fiber (AF) consumption seems to have reduced marginally by about 1.0 to 1.5% against forecasts of an unchanged demand. AF consumption in China seems to have taken a hit of about 7-9% in 2014 over previous year on back of weak global demand. This drop in Chinese consumption has been borne mainly by exporters to China who had to look for other markets. This is the lowest level of consumption post 2008 in China. Indian AF consumption was also estimated to be lower by about 3-4%. However, this drop must be seen along an increased consumption of about 12% in last year which was more due to inventory building. On the whole, Indian consumption of AF has been generally increasing gradually since 2009.

International AF prices especially in Far East Asia, the largest AF consuming region in world, were quite stable for a larger part of the FY 2014-15 pressed by softer demand despite higher crude oil prices. A decline was seen in the last 4-5 months of the year following lower upstream costs and market conditions. In India too, higher prices of AF limited demand from Sep-14 to Nov-14 and also suppressed prices from Oct-14 to Mar-15.

Globally, the AF capacity utilization was estimated to be around 88% about two notches higher than 2013. This was a combined effect of some reduction in global installed capacity as well as lower production. Chinese capacity utilization was estimated to be about 94%, about 2% lower than 2013. Indian AF capacity utilisation is estimated to be about 92%. Exports out of India contributed significantly to high capacity utilisation in 2014.

Acrylonitrile (ACN), a crude oil derivative, is the principal raw material for manufacture of Acrylic Fiber. Normally, it is influenced by crude oil prices, though the same is also impacted by it's demand-supply balance as well as demand for propylene (an input for ACN) from competing end uses and it's availability. Crude oil hit one of it's highest levels post 2008 in jun-14 before starting off to a sharp decline which continued for almost 7 months. ACN prices, however, held out for first 4-5 months of decline of crude but adjusted sharply thereafter as demand faltered on high prices. This volatility has impacted AF producers and customers alike. Exchange rate of Indian Rupee has been fairly stable during the year especially against USD quite unlike in 2013 when this was a major factor of wild movement of ACN and Acrylic Fiber prices in Indian market.

Globally, there has been a marginal drop in ACN capacity due to closure of one plant each in Japan and Korea despite start-up of one new plant in China. However, new capacity of appx 9 Lac MTPA is scheduled to start in 2015 and 2016 which is about 13% of present capacity. These new plants will reduce the supply deficit in Asian region that is currently heavily dependant on imports from US and Europe.

The year under discussion was a challenging year for global AF industry which faced steep rise and then a sharp drop in upstream crude oil on one hand and a cautious market & soft demand for AF on the other hand. Increased gap with respect to competing fibers also dampened buying of Acrylic Fiber globally, though on a limited scale. Indian AF producers continued to face imports of AF at low prices. Delay in conclusion of Anti- dumping investigations by government authorities adversely impacted margins of Indian AF producers.

b) FINANCIAL ANALYSIS & REVIEW OF OPERATIONS:

- PRODUCTION & SALES REVIEW:

The total production during the year under consideration was 20,595 MT as against 20,428 MT in the previous year. Your Company has achieved a turnover ofRs. 54,080.28 Lacs against a turnover of Rs. 50,957.64 Lacs in the previous year. After providing for depreciation ofRs. 476.87 lacs (previous year Rs. 1,136.76 lacs) and provision for current tax (including wealth tax) of Rs. 1,062.69 lacs (previous year Rs. 1,878.80 lacs), deferred tax of Rs. 56.49 lacs (previous year Rs. (322.18) lacs), Profit aftertax of the Company is Rs. 3,342.1 1 lacs as against a net profit of Rs. 4,366.97 lacs in the previous year. This is about 23.46% lower than FY 2013-14. Main reason for this drop is higher raw material and fuel cost with corresponding lower increase in sales realisation as also lower creadit of income from investments, though accrued.

- RESOURCE UTILIZATION:

i) Fixed Assets:

The gross fixed assets (including work-in- progress) as at 31st March, 2015 were Rs. 24,714.78 lacs as compared to Rs. 24,301.96 lacs in the previous year.

ii) Current Assets:

The current assets as on 31st March, 2015 were Rs. 24,791.61 lacs as againstRs.22,979.89 lacs in the previous year. Inventory level was at Rs. 7,003.78 lacs as against Rs. 7,703.09 lacs in the previous year.

c) BUSINESS OUTLOOK:

Indian economy is forecast to grow by 7.5-8.5% in 2015-16. Estimated growth in 2014-15 is 7.2%. Country seems to have come out of Current account and fiscal deficits challenges it faced in 2013-14 and 2014-15. Consumer Price Inflation is steadily coming down and monetary policies are being crafted to promote industrial growth. There is an overall improvement in business sentiment in India and the growth momentum seems to be sustainable.

Globally, US economy is forecast to grow 3.0% in 201 5 (2.4% in 2014), Euro-zone is expected to grow 1.3% (0.83% in 2014) and China at 7.0% (7.4% in 2014). Improvement in economic conditions situation especially in Euro-zone and USA can boost AF demand. However, domestic consumption of China is expected to remain stagnant.

Raw material availability especially of ACN is expected to be better with new capacities coming on-stream in 2015 and 2016. On-purpose propylene plants are getting commissioned in China which are expected to bridge the availability gap of propylene, raw material for ACN. Lower and stable crude oil prices, better availability of propylene and new capacities of ACN net of small capacity rationalisation in Asia are expected to translate into less volatile ACN prices despite some expected capacity rationalization in Asia. However, very low crude oil prices can make some of these new investments nonviable, which can change supply- demand balance.

Based on overall assessment of domestic industry, stocks in AF channel and economic growth forecasts, AF consumption in 2015-16 in India is likely to be sustained or increase slightly over 2014-15. At lower crude oil prices, price differential with respect to competing fibers is also expected to be lower which will help promote Acrylic Fiber demand. Less than normal monsoon in India, as is being forecast, can cause some damage to AF demand especially from rural areas. An area of concern is delay in completion of anti-dumping investigations by government authorities which is resulting in continued imports of unreasonably low priced AF and putting pressure on margins of Indian AF producers. Lack of an even playing field is a hurdle in creating an environment for expansion and investment in domestic capacity.

d) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has a well-designed Internal Audit programme and dedicated team for independent review of all systems, procedures and financial controls of the Company to bring in the best industry practices, compliance with internal systems & procedures and statuary laws. The Company's overall internal control system is adequate given size and nature of operations. All significant issues are regularly presented to the Audit committee of the Company. Senior management of your

Company places emphasis on taking proper actions on the significant issues, findings and recommendations of internal audit and systems are strengthened appropriately.

Internal Financial Controls:

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

e) MANAGEMENT PERCEPTION OF RISK & CONCERNS:

Though consumption of AF in India in 2014 is lower over previous year, it is still at it's highest level post 2008. Better forecasts for national economy in 2015 and subsequent years is likely to help in sustaining and possible growth of industry. Poor monsoon in 2015, though can be a dampener. At the same time, caution is suggested in expecting high growth year on year. Indian AF industry is dependent upon overseas sources for supply of major raw material in addition to ACN. Steep devaluation or high volatility in INR exchange rate can substantially raise cost to Indian customer as well as create uncertainty that can be detrimental to demand and thus growth of AF industry. As stated earlier, unreasonably low priced imports of AF will continue to pose serious problems to the domestic AF Industry.

Lower crude oil prices will translate into lower AF prices, making it more affordable to the masses. This augurs well for AF demand growth. Current forecasts of crude oil are in favour of growth of AF industry. However, a large and unexpected geo-political issue affecting crude oil availability can upset industry expectations. Also, volatile movements in crude oil prices can result in inventory gains as well as losses.

Prices of competing fibers such as cotton and polyester are though low but not likely, to promote significant substitution. Therefore, we do not foresee any major possibility of large substitution of AF by such fibers. This equation can, however, change with oversupply of these fibers or sharp drop in prices of these fibers or large change in crude oil prices impacting the entire petro-c hain.

f) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/1NDUSTRIAL RELATIONS:

This area receives continuous focus of management of your Company. Investment in human resources starts with careful selection of team members. The training and skill development of all team members to enhance their knowledge and competencies is an ongoing planned effort. Your Company has always endeavored to promote and maintain a positive work environment that encourages innovation, trust and harmony. Safety of personnel and installations receives top attention of the management. The industrial relations remained harmonious and cordial during the year.

The Company employed 301 persons during the year.

3. DIVIDEND:

The Board of Directors of your Company has recommended Dividend of Rs. 1.00/- per share on the Fully Paid-up Equity Shares of the Company.

4. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP):

In accordance with provisions of the Articles of Association of the Company, Mr. D.L Sharma, Director of your Company, retires by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment. The Board of Directors recommended his appointment for consideration of the members at the forthcoming Annual General Meeting.

Pursuant to provisions of Section 203 of the Companies Act, 2013, the below mentioned KMP's were appointed/ designated in the Board meeting held on 19th May 2014, as detailed below.

Familiarisation programmes for Board Members:

The Board members are from time to time provided with necessary documents/policies/internal procedures to get them familiar with the practices of the Company. During the year under review Company's Plant visit was organized for the Independent Directors to help them to understand business operations & working of the Company. The business strategies, performance, global developments, legal & other updates, compliance reports and other relevant information/reports etc are being periodically provided to the Board of Directors.

5. INDEPENDENT DIRECTORS:

Pursuant to the provisions of the Companies Act, 2013, in the 24,h Annual General Meeting, Mr. Munish Chandra Gupta, Mr. Sanjit Paul Singh, Mr. Surinder Kumar Bansal and Ms. Geeta Matur were appointed as Independent Directors of the Company, who are not liable to retire by rotation.

Declaration under Section 149(6):

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 read with the relevant rules.

6. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:

The optimal utilisation of energy remained a major focus area and a number of steps were taken in this direction. The information required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are attached hereto in Annexure 1 and form part of this report.

7. AUDITORS:

a. Statutory Auditors:

At 24th Annual General Meeting held on 25th September 2015, M/s. S.S. Kothari Mehta & Company, Chartered Accountants, New Delhi, were appointed as Statutory Auditors of the Company for a term starting from conclusion of 24th Annual General Meeting till the conclusion of 27!h Annual General meeting subject to ratification by Members at every Annual General Meeting. Pursuant to provisions of Section 139 (1) of the Companies Act, 2013, the matter of appointment of M/s. S.S. Kothari Mehta & Company, Chartered Accountants, as a Statutory Auditors, is placed for ratification by the members.

b. Secretarial Auditor:

Mr. Ashok K Singla, practicing Company Secretary, Ludhiana, was appointed as Secretarial Auditor & his report in Form No. MR 3 under Section 204 of the Companies Act for the Financial Year 2014-15 is attached as Annexure 2 & shall form the part of this Report.

c. Cost Auditor:

As per provisions of Section 148 of the Companies Act, 2013 the Board of Directors of your Company has recommended Mr. R.A Mehta, Practicing Cost Auditor, (being eligible for re-appointment) to be re-appointed as a Cost Auditor for the Financial Year 2015-16, subject to ratification of remuneration by the Shareholders in the forthcoming Annual General Meeting.

d. Internal Auditor:

Pursuant to provisions of Section 138 of the Companies Act, 2013, the Company has appointed Mr. Nilesh Jain, to conduct internal audit of the functions and activities of the Company and maintain internal control systems of the Company.

8. AUDITORS' REPORT:

The Statutory and Secretarial Auditors' Reports are self- explanatory and requires no comments.

9. AUDIT COMMITTEE AND VIGIL MECHANISM: Composition of Audit Committee:

The Audit committee of the Board of Directors is comprised of three directors i.e. Mr. S.P. Singh, Mr. M.C. Gupta, Independent Directors and Mr. D.L. Sharma. Mr. S.P. Singh is the Chairman of the committee and Ms. Ruchita Vij is Secretary of the Committee. The Committee met Four (4) times during the year.

Vigil Mechanism and Whistle Blower:

Pursuant to provisions of Section 1 77 (9) of the Companies Act, 2013, the Company has established a "Vigil Mechanism" incorporating Whistle Blower policy in terms of the Listing Agreement for employees and directors of the Company, for expressing the genuine concerns of unethical behaviour, frauds or violation of the codes of conduct by way of direct access to the Chairman/Chairman of the Audit Committee. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns.

The policy on "Vigil Mechanism and Whistle Blower" may be accessed on the Company's website at http://www.vardhman.com/ user_files/342a7263db1 c05444c 897e9056f0e1 d9707cda151436265916.pdf

to. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance and a separate report on Corporate Governance is being annexed hereto and shall form part of the Annual Report. A certificate from the Statutory Auditors of the Company regarding compliance of governance norms stipulated under Listing Agreement is also annexed to the Corporate Governance report.

11. BOARD MEETINGS:

During the Financial Year 2014-15, the Board met Four (4) times i.e. on 19.05.2014, 02.08.2014, 01.11.2014 and 02.02.2015. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013.

12. DIRECTOR'S RESPONSIBILITY STATEMENT:

Pursuant to Section 134 (5) of the Companies Act, 2013, the Directors confirm that:

i. In the preparation of the annual accounts, the applicable Accounting Standards have been followed.

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 at the end of the financial year and of the profit or loss of the Company for that period.

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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

v. Laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively.

vi. Devised proper systems to ensure compliance with the provisions of all applicable laws and those systems were adequate and operating effectively.

13. PERSONNEL & RELATED DISCLOSURES:

Your Company continues to lay emphasis on continued qualitative growth of its human resources by providing a congenial and conducive work environment in consonance with its belief that the real strength of its organization lies in its employees.

None of the employees of your Company has received salary of Rs. 60.00 lac per annum or Rs. 5.00 lac per month or more during the Financial Year 2014-15. Accordingly, no particulars of employees are to be given pursuant to the provisions of Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) & 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The particulars required under Section 197 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed hereto and form part of this report.

In terms of Section 197(14) of the Companies Act, 2013, the Company does not have any subsidiary Company. However, details regarding remuneration received from holding company by Managing Director is annexed hereto and form part of this report.

The above mentioned details under Section 197 of the Companies Act, 201 3 are provided in Annexure 3.

14. COMPANY POLICIES & STATUS OF DEVELOPMENT:

a. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES:

Vision & core areas of CSR:

Your Company is committed to and fully aware of its Corporate Social Responsibility (CSR), the guidelines in' respect of which were more clearly laid down in the recently overhauled Companies Act. The Company's vision is to pursue a corporate strategy that enables shareholder value enhancement in a mutually reinforcing and synergistic manner.

The CSR Policy approved by the Board may be assessed on the website of the Company at http://www.vardhman.com/ userjiles/61 a990114df67d8501 b530691 cbe89070be539571436265843.pdf

The Company has identified following thrust areas for CSR: endeavour for promoting education by setting up schools, colleges to deliver high quality education to students of all strata of society.

- ENVIROMENT PROTECTION AND ENERGY CONSERVATION: To protect environment and to sustain and continuously improve standards of Environment, Health and Safety through the collective endeavour of Company and its employees at all levels towards attaining world class standards.

- DEVELOPMENT OF HUMAN CAPITAL: To encourage the development of human capital through skills development, vocational training programmes.

- RURAL DEVELOPMENT: To contribute to development in rural areas near by unit of the Company and knowledge sharing and other social practices such as soil and moisture conservation and watershed management etc.

- OTHER INITIATIVES:

To contribute to empowering women economically, supplementing primary and secondary education and participating in rural capacity building programmes and such other schemes.

To respond to emergency situations & disasters by providing timely help to affected victims and their families.

Any other project/programme pertaining to activities listed in Schedule VII of the Companies (Corporate Social Responsibility) Rules, 2014 and amendments thereto.

The Company has spentRs. 12.84 lacs on CSR activities during FY 2014-15. We hope, in the coming year, many good proposals, specifically related to health, education and rural development, may be identified and considered by the Committee where the required amount may be spent fruitfully.

The disclosers under Section 134(3) of the Companies Act, 201 3 read with Rule 9 of Companies (Accounts) Rules 2014 i.e. Annual Report on CSR activities for Financial Year 2014- 1 5 is attached herewith in Annexure 4.

b. NOMINATION AND REMUNERATION:

The Nomination & Remuneration committee was constituted by the Board on 02.08.2014, consisting of four directors viz Mr. M.C. Gupta, Mr. S.P. Oswal, Mr. B.K. Choudhary and Ms. Geeta Mathur. Mr. M.C. Gupta is the Chairman of said Committee. The Committee met at once, during the year under review. The Company's approved Policy relating to appointment of Directors, payment of Managerial remuneration, Directors' qualifications, positive attributes, Independence of Directors and other related matters as provided under Section 178(3) & (4) of the Companies Act, 2013 is attached herewith in Annexure 5.

c. RISK MANAGEMENT:

The risk management includes identifying types of risks and its assessment, risk handling and monitoring and reporting, which in the opinion of the Board may threaten the existence of the Company. The Risk Management Committee was constituted by the Board on 02.02.2015, comprising of Mr.

S.P. Singh, Ms. Geeta Mathur, Mr. B.K. Choudhary & Mr. Vivek Gupta. The Committee has formulated the Risk Management Policy which was subsequently approved by the Board of Directors.

The Risk Management Policy may be assessed on the website of the Company at http://www.vardhman.com/user_files/ 8c586426f23ba3ac0445c849743b72c67c19d6fd1436265890.pdf.

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

The particulars of Loans, guarantees or investments made under Section 186 are forming part of the notes to financial statements provided in this Annual Report (please refer Note 6b to 6d and 7a to the financial statements).

16. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:

All the 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. The particulars of Contracts or Arrangements made with related parties as specified in form AOC 2 are covered under Note No. 16d to the financial statements, which is set out for related party transactions.

The Related Party Transaction Policy may be accessed on the website of the Company at http://www.vardhman.com/ user_files/1 C9ec9e9c9ce1b5b82aef9485050628bbd40d5551436265865.pdf

17. EXTRACT OF ANNUAL RETURN:

The extract of Annual Return pursuant to the provisions of Section 134 (3) (a) of the Companies Act 2013, is furnished in Annexure 6 (Form MGT 9) and is attached to this Report.

18. ANNUAL PERFORMACE EVALUATION:

During the year under review, a policy on perfomarance evaluation of Independent Directors, Board and its Committees, other individual directors of the Company including detailed process & parameters has been formulated by the Company.

The meeting of Independent Directors of the Company to evaluate the performance of Non-Independent Directors, Chairman & the Board as a whole for FY 2014-15 was held on 31st March 2015. The evaluation based on various parameters was discussed by the Independent Directors.

19. GENERAL DISCLOSURE:

Your directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details of subsidiary, joint venture or associate company.

2. Issue of equity shares with differential rights to dividend, voting or otherwise.

3. Details relating to deposits covered under Chapter V of the Act.

4. No material changes and commitments affecting the financial position of the Company occurred between the end of the Financial Year to which this financial statements relate and the date of this report.

5. No significant/material orders have been passed by any Regulator/Court/Tribunal which could impact the going concern status & future operations of the Company.

6. No change in nature of Business of the Company.

7. No unclaimed Dividend to Investor Education and Protection fund.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

20. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to the Government Authorities, Financial Institutions & Bankers for their continued and valuable co-operation and support to the Company.

Your Directors express their deep appreciation for the devoted and sincere efforts put in by the members of the team at all levels of operations in the Company during the year. The Company feels confident of continued cooperation and efforts from them in future also.

For And on Behalf of the Board Sd/-

Place: Gurgaon (S.P. Oswal)

Date: May 04, 2015 Chairman




Mar 31, 2014

Dear Members,

The Directors of your Company have pleasure in presenting their Twenty-Fourth Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2014.

1. FINANCIAL RESULTS:

The Financial results for the year are as under:- (Rs. in Lacs)

Particulars 2013-14 2012-13

Revenue from Operations (Gross) 50,957.64 47,369.65

Profit before Depreciation,

Interest & Tax (PBDIT) 7,112.77 5,012.26

Interest & Financial Charges 52.57 88.38 Profit before depreciation &

Tax (PBDT) 7,060.20 4,923.88

Depreciation 1,136.76 1,128.93

Profit before Tax 5,923.44 3,794.95

Provision for Tax

– Current Tax 1,878.80 1,530.00

– Deferred Tax (322.18) (175.62)

– IT adjustment for earlier year – 0.25

Profit after Tax 4,366.82 2,440.32

Prior period adjustments (Net) (0.15) 0.07

Net Profit 4,366.97 2,440.39

Earnings per share (in Rs.) 4.69 2.38

2. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the Listing Agreement with Stock Exchange in India, is presented as under.

a) ACRYLIC FIBRE INDUSTRY - GLOBAL AND INDIAN PERSPECTIVE:

In the year 2013, global Acrylic Fibre (AF) consumption seems to have shown a marginal growth of less than 1% over the consumption in the previous year as against expectations of a moderate growth. Estimates of all manmade fibers'' consumption growth are over 9% and those of all fibers'' are around 4% globally in the same year. The Chinese AF consumption seems to have increased marginally by about 2% in 2013 over 2012. Infact, Chinese AF consumption has stagnated and has been fluctuating in a narrow range over the last four years. Globally, AF consumption has not shown any growth and is reported to have declined marginally in last five years. As against this consumption drop globally and stagnancy in China, Indian AF consumption seems to have crossed one Lac MT mark in 2013 showing a growth of over 9% over 2012. This growth in AF consumption in India in 2013 is higher than that of estimated growth for all manmade fibers ( 3.7%) and all fibers ( 7.0%) during the same period. The faster growth in Indian AF consumption as compared to growth in other fibers in India as well as globally during uncertain economic and geo-political situations is both positive and encouraging.

International AF prices especially in Far East Asia, the largest AF consuming region in world, were stable during 2013 despite cyclical movement of Acrylonitrile (ACN, the main raw material for Acrylic Fiber) prices. However, in India, AF prices moved in tandem with ACN prices though price of other competing synthetic fibers in India did not exhibit so much volatility.

Globally, the AF capacity utilization was estimated to be around 86%, Chinese capacity utilization was estimated to be less than 80% with Indian capacity utilization at above 90%.

The principal raw material of the Company Acrylonitrile (ACN) followed crude oil prices, which have been volatile. ACN Rates at beginning of the year were lowest and ended the year almost 12% higher in US Dollar (USD) terms amidst volatility throughout the year. However, due to steep devaluation of INR, increase in raw material cost was much higher in Indian rupee terms. Further, fluctuation in USD/INR exchange rate created many anxious moments as well as caused difficulty in industry. Additional ACN capacity of more than 3.5 Lac MT was added in Asia in 2013 which helped feed about 4% increase in global consumption of ACN, which was shared by applications other than AF. Global AF consumption could have been higher but for the reasons of slowing Chinese economy, geo- political factors in some of the regions, feeble recovery in Eurozone and US.

The year under discussion was full of challenges for AF industry both globally as also in India. Global industry faced a declining demand and Indian industry had to face steep depreciation and volatility in INR. Indian AF producers faced additional challenge of AF imports at low prices. Indian industry was able to achieve higher exports thereby leading to improved capacity utilization.

b) FINANCIAL ANALYSIS & REVIEW OF OPERATIONS:

- PRODUCTION & SALES REVIEW:

The total production during the year under consideration was 20,428 MT as against 20,404 MT in the previous year. Your Company has achieved a turnover of Rs. 50,957.64 Lacs against a turnover of Rs. 47,369.65 Lacs in the previous year, an increase of over 7.57%. After providing for depreciation of Rs. 1,136.76 lacs (previous year Rs. 1,128.93 lacs) and provision for current tax (including wealth tax) of Rs. 1,878.80 lacs (previous year Rs. 1,530.00 lacs), deferred tax of Rs. (322.18) lacs (previous year Rs. (175.62) lacs), Profit after tax of the Company is Rs. 4366.82 lacs as against a profit after tax of Rs. 2,440.32 lacs in the previous year which is a healthy increase of over 78.94%.

- RESOURCE UTILIZATION:

i) Fixed Assets:

The gross fixed assets (including work-in- progress) as at 31st March, 2014 were Rs. 24,301.96 lacs as compared to Rs. 23,959.09 lacs in the previous year.

ii) Current Assets:

The current assets as on 31st March, 2014 were Rs. 22,979.89 lacs as against Rs. 22,583.48 lacs in the previous year. Inventory level was at Rs. 7,703.09 lacs as against Rs. 6,621.15 lacs in the previous year.

- FINANCIAL CONDITIONS & LIQUIDITY: Liquidity & Capital Resources:

(Rs.Rs in Lacs)

PARTICULARS 2013-14 2012-13

Cash & cash equivalents:

Beginning of the year 1,209.08 534.16

End of the year 582.31 1,209.08

Net cash provided/(used) by:

Operating Activities 4,266.15 2,372.79

Investing Activities (4,393.44) 285.20

Financial Activities (499.47) (1,983.07)

c) BUSINESS OUTLOOK:

The forecasts on Indian economic growth vary from 5.0% to 6.0% in the year 2014-15. Current account and fiscal deficits continue to pose challenges. Consumer Price Inflation, though under little check for about a year, is still at uncomfortable levels. This has prompted RBI to follow tight monetary policy. Exchange rate fluctuations and devaluation are another concern of industry especially due to large dependence on import of ACN.

Globally, US economy is forecast to grow 2.8% in 2014 (1.9% in 2013), Eurozone is expected to grow 1.0% (-0.4% in 2013) and China at 7.5% (7.7% in 2013). Improvement in global economic situation especially in Eurozone can be a pull on AF demand which has been absent during past few years.

About 6 Lac MT p.a. additional capacities of ACN are likely to be commissioned in China in second half of 2014. This will be approx. 11% of ACN consumption in 2013. Another about 4 Lac MT is reported to go on- stream in 2015 and 7 Lac MT in 2016. There is a possibility that some of this capacity expansion may be rescheduled to later years or even dropped. Yet, a substantial increase in ACN capacity can be expected.

Demand of ACN is not expected to grow at this pace. This is likely to keep ACN prices stable at lower numbers in next few years. Although some capacity rationalization in Japan and some other locations is not ruled out, yet supply will outpace demand. Some of the new capacities planned in 2016 are based on low cost propylene (raw material for ACN) technologies that are likely to support ACN and AF consumption.

Based on overall assessment of domestic industry, stocks in AF channel and economic growth forecasts, AF demand in 2014-15 in India is expected to be slightly higher than in 2013-14. Price differential with respect to competing fibers could be a challenge for domestic Industry. Less than normal monsoon in India, as is being forecast, can adversely affect AF demand especially from rural and semi-urban areas. Stable and affordable prices of ACN, as are expected, are likely to help growth of AF industry and its downstream which is likely to support operations of AF producers in India. At the same time, there is an urgent need to stop AF imports at unreasonable and unjustified prices from few countries that are taking away a large share of growth in Indian market and also stifling fresh investment in Indian AF industry.

d) INTERNAL CONTROL SYSTEM:

Your Company has a well-designed Internal Audit programme to review all systems, processes and controls of the Company to bring in the best industry practices, compliance with internal systems & procedures and statuary compliances. Senior management of your Company places emphasis on taking timely action on the findings and recommendations of internal audit and systems are strengthened appropriately.

e) MANAGEMENT PERCEPTION OF RISK & CONCERNS:

Despite lower economic growth in 2013-14, AF demand in India has shown growth. Whether or not this growth will sustain is difficult to forecast. Continued slowdown in Indian economic growth, slow pace of new jobs creation, high inflation and possible high fiscal deficits are the risks associated with future growth of AF industry in India. Monsoon, as discussed earlier, is another important demand driver for AF in India and any substantial deficit can adversely affect Indian AF demand. Indian AF industry is dependent upon overseas sources for supply of major raw materials in addition to ACN. Another steep devaluation of INR can substantially raise costs to Indian customer that can be detrimental to demand and thus growth of AF industry. Additionally, unreasonably low priced imports of AF will continue to pose serious problems to the domestic AF Industry.

Global political and economic factors are affecting global economy in more than one way. Demand pick-up remains shaky and still uncertain in advanced economies of US and Europe. Withdrawal of stimulus in US and course correction in Chinese economic policies are affecting the economic sentiments globally. Prices of commodities such as cotton, metals and especially crude oil have become volatile and uncertain. Industry players are adopting a cautious approach as a response to this situation. Main raw materials of AF are petrochemical derivatives and are susceptible to fluctuations in crude oil prices. Few large producers influence global ACN

supply and any temporary adjustments of operations by one or some of them can affect the supply demand balance and thus prices. Low prices of competing fibers such as polyester can eat into AF demand, as has already been seen in past.

f) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS:

This area receives continuous focus of management of your Company. Investment in human resources starts with careful selection of team members. The training and skill development of all team members to enhance their knowledge and competencies is an ongoing planned effort. Your Company has always endeavoured to promote and maintain a positive work environment that encourages innovation, trust and harmony. Safety of personnel and installations receives top attention of the management. The industrial relations remained harmonious and cordial during the year.

The Company employed 297 persons during the year.

3. BUY-BACK OF EQUITY SHARES:

The Company commenced the Buy-Back of its Equity Shares under Open Market mechanism with effect from May 29, 2012 and was completed on May 08, 2013. Pursuant to said offer, the Total number of Equity Shares bought back under the Buy Back is 1,55,24,672. The Company bought back 970,531 Equity shares (previous year 14,554,141) of Rs. 10/- each and extinguished 1,618,512 (previous year 13,906,160) equity shares during the year ended 31st March, 2014. Consequent to such extinguishment of shares, paid up share capital of the Company as on March 31, 2014 stood at Rs. 9,300.78 lacs.

4. DIRECTORS:

Mr. S.P. Oswal, Director of your Company, retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

5. DIRECTOR''S 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;

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 at the end of the financial year and of the profit or loss of the Company for that period;

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 safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

6. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Corporate Governance Clause of the Listing Agreement is annexed to the report on Corporate Governance.

7. STATUTORY AUDITORS:

M/s. S.S. Kothari Mehta & Company, Chartered Accountants, New Delhi, retire at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment for a term of three years starting from conclusion of 24th Annual General Meeting till the Conclusion of 27th Annual General Meeting in 2018-19.

8. STATUTORY AUDITORS'' REPORT:

The Statutory Auditors'' Report on the Accounts is self- explanatory and requires no comments.

9. COST AUDITOR''S REPORT:

The Cost Auditor''s Report for the Financial Year 2013-14 will be forwarded to the Central Government as required by the law.

10. PERSONNEL:

None of the employees has received salary of Rs. 60.00 lac per annum or Rs. 5.00 lac per month or more during the Financial Year 2013-2014. Accordingly, no particulars of employees are to be given pursuant to the provisions of Section 217 (2A) of the Companies Act, 1956.

11. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:

The optimal utilisation of energy remained a major focus area and a number of steps were taken in this direction. The information required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of the Board of Directors), Rules 1988, with respect to these matter is appended hereto and forms part of this report.

12. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to the Government Authorities, Financial Institutions & Bankers for their continued and valuable co- operation and support to the Company.

Your Directors express their deep appreciation for the devoted and sincere efforts put in by the members of the team at all levels of operations in the Company during the year. The Company feels confident of continued cooperation and efforts from them in future also.

For and on behalf of the Board

Place: Gurgaon (S.P. Oswal) Date: 19th May, 2014 Chairman


Mar 31, 2013

Dear Members,

The Directors of your Company have pleasure in presenting their Twenty-Third Annual Report together with the Audited Accounts of the Company for the year ended 31* March, 2013.

1. FINANCIAL RESULTS:

The financial results for the year are as under:-

(Rs. in Lacs)

Particulars 2012-13 2011-12

Sales (Gross) 47,369.65 42,122.05

Profit before Depreciation, 5,012.26 4,696.64

Interest & Tax (PBDIT)

Interest & Financial Charges 88.38 43.71

Profit before depreciation & 4,923.88 4,652.93

Tax (PBDT)

Depreciation 1.128.93 1,124.18

Profit before Tax 3,794.95 3,528.75

Provision for Tax

- Current Tax 1,530.00 1,325.00

- Deferred Tax (173.62) (252.69)

- IT adjustment for 0.25 2.94 earlier year

Profit after Tax 2.440.32 2,453.50

Prior period adjustments (Net) (0.07) 4.56

Net Profit 2,440.39 2,448.94

Earnings per share (in Rs.) 2.38 2.26

2. BUY-BACK OF EQUITY SHARES:

The Company commenced the Buy-Back of its Equity Shares under Open Market mechanism with effect from May 29, 2012, after it was approved by the Board of Directors of the Company at its meeting held on May 09, 2012. Pursuant to said offer, the Company bought back 14,554,141 equity shares oft 10/-each and extinguished 13,906,160 equity shares during the year ended 31st March, 2013. Consequent to such extinguishment of shares, paid up share capital of the Company as on March 31, 2013 stood atRs. 9,462.63 lacs.

4. DIRECTORS:

Mr. Sachit Jain and Dr. A.K. Bakhshi, Directors of your Company, retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

5. DIRECTOR''S 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;

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 at the end of the financial year and of the profit or loss of the Company for that period;

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 safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

6. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. A separate report on Corporate Governance forming partofthe Annual Report ofthe Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Corporate Governance Clause of the Listing Agreement is annexed to the report on Corporate Governance.

7. STATUTORY AUDITORS:

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

8. STATUTORY AUDITORS'' REPORT:

The Statutory Auditors'' Report on the Accounts is self- explanatory and requires no comments.

9. COST AUDITOR:

The Board of Directors of your Company has recommended Mr. R.A Mehta, Practising Cost Auditor, Ankleshwar (being eligible for re-appointment) to be re-appointed as a Cost Auditor for the financial year 2013-14 subject to approval of the Central Government under section 233B of the Companies Act, 1956.

10. PERSONNEL:

None of the employees has received salary of Rs. 60.00 lac per annum or Rs. 5.00 lac per month or more during the financial year 2012-2013. Accordingly, no particulars of employees are to be given pursuant to the provisions of Section 217 (2A) of the Companies Act, 1956.

11. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:

The optimal utilisation of energy remained a major focus area and a number of steps were taken in this direction. The information required under Section 217(1)(e> of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of the Board of Directors), Rules 1988, with respect to these matter is appended hereto and forms part of this report.

12. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to the Government Authorities, Financial Institutions & Bankers for their continued and valuable co- operation and support to the Company.

Your Directors express their deep appreciation for the " devoted and sincere efforts put in by the members of the team at all levels of operations in the Company during the year. The Company feels confident of continued cooperation and efforts from them in future also. For and on behalf of the Board

Place: Gurgaon (S.P. Oswal)

Date: May28, 2013 Chairman


Mar 31, 2012

Dear Members,

The Directors of your Company have pleasure in presenting their Twenty-Second Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2012.

1. FINANCIAL RESULTS :

The financial results for the year are as under:- (Rs. in Lacs)

Particulars 2011-12 2010-11

Sales (Gross) 42,122.05 43,041.20

Profit before Depreciation, Interest & Tax (PBDIT) 4,696.63 6,796.39

Interest & Financial Charges 43.71 40.62

Profit before depreciation & Tax (PBDT) 4,652.92 6,755.77

Depreciation 1,124.18 1,116.89

Profit before Tax 3,528.74 5,638.88

Provision for Tax

- Current Tax 1,325.00 2,163,.00

- Deferred Tax (Net of Adjustments) (252.70) (297.84)

- IT adjustment for earlier year 2.94 -

Profit after Tax 2,453.50 3,773.72

Prior period adjustments (Net) 4.56 9.56

Net Profit 2,448.94 3,764.16

Balance Brought from last year 10,772.94 7,008.78

Balance carried to Balance Sheet 13,221.88 10,772.94

Earnings per share (in Rs.) 2.26 3.47

3. DIRECTORS:

Mr. M.C. Gupta and Mr. D.L. Sharma, Directors of your Company, retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

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;

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 at the end of the financial year and of the profit or loss of the Company for that period;

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 safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

5. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Corporate Governance Clause of the Listing Agreement is annexed to the report on Corporate Governance.

6. STATUTORY AUDITORS:

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

7. STATUTORY AUDITORS REPORT:

The Statutory Auditors Report on the Accounts is self- explanatory and requires no comments.

8. COMPLIANCE CERTIFICATE FROM COST AUDITOR:

Pursuant to section 233B of Companies Act, 1956 read with Cost Audit Rules 2011, the Company will receive the Cost Audit Compliance Report for the Financial Year 2011-12 from Mr. R.A. Mehta, Practising Cost Accountant, Ankleshwar.

9. COST AUDITOR:

The Board of Directors of your Company has recommended Mr. R.A. Mehta, Practicing Cost Accountant, Ankleshwar, to be appointed as a Cost Auditor for the Financial Year 2012-13, subject to approval of the Central Government under section 233B of the Companies Act, 1956.

10. PERSONNEL:

None of the employees has received salary of Rs. 60.00 lacs per annum or Rs. 5.00 lacs per month or more during the financial year 2011-2012. Accordingly, no particulars of employees are to be given pursuant to the provisions of section 217(2A) of the Companies Act, 1956.

11. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:

The optimal utilisation of energy remained a major focus area and a number of steps were taken in this direction. The information required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of the Board of Directors), Rules 1988, with respect to these matters is appended hereto and forms part of this report.

12. ACKNOWLEDGEMENT:

Your Directors are pleased to place on record their sincere gratitude to the Government Authorities, Financial Institutions & Bankers for their continued and valuable co- operation and support to the Company.

Your Directors express their deep appreciation for the devoted and sincere efforts put in by the members of the team at all levels of operations in the Company during the year. The Company feels confident of continued cooperation and efforts from them in future also.

For and on behalf of the Board

Place : Gurgaon (S.P. Oswal)

Dated: May 09, 2012 Chairman


Mar 31, 2011

Dear Members,

The directors of your Company have pleasure in presenting their Twenty First Annual Report together with the Audited Accounts of the Company for the yea/ ended 31st March, 2011.

1. Financial Results :

The Financial Results for the year are as under: -

(Rs. in lacs) Particulars 2010-11 2009-10

Safes (Gross) 43,035.51 28,673.88

Profit before Depreciation, Interest & Tax (PBDIT) 6,796.40 6,864.45

Interest & Financial Charges 40.62 33.14

Profit before Depreciation & Tax (PBDT) 6,755.78 6,831.31

Depreciation 1,116.90 1,124.28

Profit before Tax 5,638.88 5,707.03

Provision for Tax

- Current Tax (including Wealth Tax) 2,163.00 1,150.00

- Deferred Tax (297.84) 212.88

- IT adjustment for earlier years - 0.01

Profit after Tax 3,773.72 4,344.14

Prior period adjustments (Net) 9.58 0.04

Net Profit 3,764.14 4,344.10

Balance brought from last year 7,008.80 2,664.70

Total carried to Balance Sheet 10,772.94 7,008.80

Earnings per share (Rs.) 3.47 4.00

2. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

a) ACRYLIC FIBRE INDUSTRY - GLOBAL AND INDIAN PERSPECTIVE:

In the year 2010, global total fibre consumption has been estimated to grow by 2.4% over the previous yea*, though at 84.64 mio MT still remaining below the consumption seen in the year 2007 at 85,55 mio MT. In India, total fibre consumption is estimated to have grown by about 6% in the year 2010. The Chinese total fibre consumption is estimated to have grown by 9.3% in the year 2010. Against this backdrop of growth in total fibre consumption, the growth in acrylic fibre consumption has been estimated to be relatively modest at around 2% globally with little change in Indian and Chinese consumption over the previous year.

The year 2010, specially, the 2nd half witnessed unprecedented increase in cotton prices as a result of several factors. This increase, to a certain extent, led to price increase in other competing fibres especially polyester fibre and to a lesser extent other natural and manmade fibres. It also led to accelerated inter-fibre substitution.

The acrylic fibre prices witnessed drop in the 1st half of the year 2010-11 both on account of drop in AcryIonitrile prices (major raw material) as also large price differential with polyester fibre prices leading to threats of increased substitution and drop in acrylic fibre demand. However, the volatility in crude oil and propylene prices in the 2nd half of the year 2010-11 led to increase in Acrylonitrile prices leading to pulling up of acrylic fibre prices also. The increase in polyester fibre prices in tandem with cotton also supported recovery in acrylic fibre prices. The continuous trend of increase in Acrylonitrile prices led to inventory value gains for Indian fibre producers. The effective spread of acrylic fibre industry improved in the 2nd half of the year which is reflected in the overall performance of the Company. The acrylic fibre industry operating rate was around 86% in the year globally. The operating rate of domestic acylic fibre industry was also at almost this level.

The availability and prices of Acrylonitrile have major influence on the performance of acrylic fibre industry. The demand of Acrylonitrile increased by around 7% in the year 2010 leading to a tight balance between demand arid supply. With fresh Acrylonitrile capacity coming up in Asia in the year 2011, the tight balance is likely to ease slightly. On medium term basis; the demand and supply of Acrylonitrile is likely to maintain a close balance.

The global structure of acrylic fibre market shows Capacity in few countries With very little or no domestic consumption. The producers from these countries have to depend mainly on exports. The dumping by these producers in countries Iike ours is a continous and live threat.

b) FINANCIAL ANALYSIS & REVIEW OF OPERATIONS: -

PRODUCTION & SALES REVIEW:

The total production during the year under consideration was 20,044 MT as against 18,506 MT in the previous year. Your Company has achieved a turnover of Rs. 43,033.51 lacs against a turnover of Rs. 28,673.88 lacs in the previous year. After providing for depreciation of Rs. 1,116.90 lacs (previous year Rs. 1,124,28 lacs) and provision for Current tax (including wealth tax) of Rs. 2,163.00 lacs (previous year Rs. 1,150.00 lacs ), deferred tax (net of adjustments ) of Rs. (297.84) lacs (previous year Rs. 212.88 lacs), and income taxad/ustnierrte for earlier years of Rs. Nil lacs (previous year 0.01 lacs), Profit afte tax of the Company is Rs. 3,773.72 lacs as against Rs. 4,344.14 lacs in the previous year.

- RESOURCE UTILISATION:

i) Fixed Assets;

The gross fixed assets (including work-in-progress) as at 31st March, 2011 were Rs. 23,728.90 lacs as compared to Rs. 23,581.91 lacs in the previous year.

ii) Current Assets:

The net current assets as on 31st March, 2011 were Rs. 9,804.03 lacs as against Rs. 9,107.08 lacs in the previous year. Inventory level was at Rs. 4,535.92 lacs as against Rs. 4,460:88 lacs in the previous year.

- FINANCIAL CONDITIONS & LIQUIDITY: Liquidity & Capital Resources:

(Rs. in Lacs)

2010-2011 2009-2010

Cash & cash equivalents:

Beginning of the year 338.57 160.37

End of the year 431.48 338.57

Net cash provided/(used) by:

Operating Activities 1,612.78 4,399.52

Investing Activities (1,505.72) (4288.64)

Financial Activities (14.15) 67.32

c) BUSINESS OUTLOOK:

The global economic growth in the year 2010 at more than 3.5% and expected growth in the year 2011 and 2012 around 4% p.a. lend confidence in world economic recovery. The Indian economy is expected to grow between 7 to 8% in the year 2011 -12 and beyond in the remaining period of 12th five year plan period. The increase in per capita income will support the demand of textile products within the country. The forecast of normal monsoon in the year 2011 is also a positive factor. The Government of India has extended TUFS for the retmaining part of the 12th five year plan which will encourage creation of fresh textile capacity deploying modern technology both for domestic and export markets . Many global textile brands and retailers are looking beyond China for outsourcing. These are some of the major factors which augur well for growth of textile industry in India. The acrylic fibre industry is also likely to be a beneficiary of this growth.

There are several factors which seem to pose challenges some of which look formidable. Due to geopolitical and other factors, crude oil prices are once again on a boil. The commodity prices have touched unprecedented levels. The food prices have shot up globally. The inflationary pressures are leading to tight monetary policies which may adversely impact the growth momentum. These factors may slow down the economic recovery world over and specially could be very challenging for emerging economies and poorer countries.

For acrylic fibre industry, structural issues of propylene market besides increase in crude oil prices are very important. These two factors along with planned and unplanned turnarounds of Acrylonitrile plants in the 1st half of the year 2011 have led to historically high prices of Acrylonitrile at the time of writing this report. On the

other hand, cotton and polytester prices have shown some downward movement in the recent weeks. Though increase in Acrylonitrile prices warrant increase in acrylic fibre prices, the market may not accept the increase. Besides shrinkage in demand due to macro economic factors; the difference between acrylic fibre and polyester prices has widened which may encourage substitution. The margins of acrylic fibre producers, are likely to come under pressure.

The coming financial year 2011 -12 is likely to be a difficult period on account of pressures both on demand and prices of acrylic fibre as also risk of inventory value losses. But management will remain vigilant and deal with the situation with prudence and foresight. Nevertheless, the year will be full of challenges and the effect on performance cannot be ruled out.

d) INTERNAL CONTROL SYSTEM:

The internal audit is well designed and adequate to review all systems, processes and controls of the Company. It covers review and examination of compliances with all policies procedures and statutory requirements. The suggestions for improvement of systems and processes form part of the recommendations of the internal audit team. The findings and recommendations of the internal audit team are discussed and examined by the senior management and the audit committee of the boards The timely implementation of the corrective measures is tracked.

e) MANAGEMENT PERCEPTION OF RISK & CONCERNS:

The principal raw material Acrylonitrile and Vinyle Acetate Monomer are both petrochemical derivatives and are highly susceptible to volatility in crude oil prices. The propylene market structure, shortages and fluctuating prices-further add to the volatility.

There are only a limited number of large Acrylonitrile producers in the World which influence the supply and pricing of Acrylonitrile.Raw material sourcing and prices are a major risk area for the Company. In the first five months of the year 2011, Acrylonitrile prices have touched historically high levels as a result of combination of the above said factors. The present prices look to be disconnected with long term values in the supply chain. Any sharp correction is likely to add to the woes of the acrylic fibre industry.

The inter-fibre substitution in particular of acrylic fibre by polyester remain an area of concern. The inflationary pressures may lead to slower economic growth rates both in India and globally and may adversely impact textile consumption including acrylic fibre consumption. Changes in monsson pattern and its impact on agriculture incomes, climatic conditions such as length of winter Season and fashion trends may become factors of concern.

f) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS:

The Company continued with its efforts of on going learning organization and the emphasis on development of the potential of its people through training and development. The functional training programmes were reviewed and further strengthened by incorporating customers. The efforts to strengthen positive work environment promote innovation and excellence were renewe.The company has always placed great emphasis on building a culture of mutual trust and harmony. The efforts in this direction were continued. The industrial relations remained harmonious and peaceful during the year.

The Company employed over 290 persons during the year.

3. DIRECTORS:

Mr. S.P. Oswal and Mr. S.P. Singh, Directors of your Company, retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment. 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;

ii) appropriate accounting policies have been, selected and applied consistently, and have made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the profit of the Company for the year ended on 31st March,2011;

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 and detecting fraud and other irregularities; and

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

6. CORPORATE GOVERNANCE:

The Company has in place a system of Corporate Governance. A separate report on Corporate Governance forming part of the Annual Report of the Company is annexed hereto. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance Listing Agreement is annexed to the report on Corporate Governance.

6. AUDITORS:

M/s. S.S. Kothari Mehta & Company Accoutants New Delhi retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re- appointment.

7. AUDITORS' REPORT:

The Auditors' Report on the Accounts is self- explanatory and requires no comments.

8. PERSONNEL:

None of the employees has received a saJaryiofiRs. 60.00 lac per annum or Rs. 5.00 lac per month or more during the financial year 2010-2011. Accordingly, no particulars of employees are to be given pursuant to the provisions of Section 217 (2A) of the Companies Act, 1956.

9. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:

The optimal utilisation of energy remained a major focus area and a number of steps were taken in this direction. The information required under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Boards of Directors) Rules, 1988, with respect to these matters is appended hereto and forms part of this report.

10. ACKNOWLEDGEMENT

Your Directors are pleased to place on record their sincere gratitude to the Government Authorities, Financial institutions & Bankers for their continued and valuable co-operation and support to the Company.

Your Directors express their deep appreciation for the devoted and sincere efforts put in by the members of the team at all levels of operations in the Company during the year. The Company feels confident of continued co-operation and efforts from them in future also.

For and on behalf of the Board

(S.P. Oswal) Chairman

Place : New Delhi Dated : 9th May, 2011

 
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