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Directors Report of Virat Industries Ltd.

Mar 31, 2017

The Directors are pleased to present the 27th Annual Report together with the Audited Statement of Accounts for the year ended 31 March, 2017.

FINANCIAL RESULTS AND ACCOUNTS:

The Financial Results are as under: (Rs. in Lacs)

Particulars

2016 - 2017

2015 - 2016

Gross Income

2649.02

2639.24

Profit Before Interest and Depreciation

576.85

574.33

Finance Charges

8.02

3.89

Gross Profit before Depreciation

568.83

570.43

Provision for Depreciation

129.89

122.26

Net Profit Before Tax

438.94

448.17

Provision for Tax

148.00

146.35

Net Profit After Tax

290.94

301.82

Balance of Profit brought forward

890.45

766.96

Balance available for appropriation

1181.40

1068.78

Proposed Dividend on Equity Shares (previous year Rs.2.50 per Equity Share) (Refer Note No. (i))

_

123.09

Tax on proposed Dividend

-

25.06

Transfer to General Reserve

-

30.18

Surplus carried to Balance Sheet

1181.40

890.45

Note: (i) Proposed Dividend on Equity Share

Proposed Dividend for the year ended 31 March, 2017 Rs. 2.50 per share

123.08

_

Dividend Distribution Tax on proposed dividend

25.06

-

Proposed Dividend on equity share are subject to approval in the Annual General Meeting and are not recognized as liability (including Dividend Distribution Tax thereon) as at 31 March, 2017.

Year in retrospect

The year under review has been quite satisfying and successful for your Company, against the backdrop of many challenges and fierce global headwinds.

Revenues:

The knitting production of 63.08 lakh pairs this year, being the all time high achieved so far, recorded commendable volume growth of 11.53% over the previous year. The dispatches of 60.20 lakh pairs this year, the highest made since inception of the factory, are 9.20% higher compared to the previous year, reflecting an improved demand pull for your Company''s socks in both overseas and domestic markets. Sales for the year remained flat at Rs. 2344 lakh against Rs. 2340 lakh of the previous year. The disparity in growth rates between pairs of socks dispatched and sales value earned is due to 8.20% decline in the realized rate per pair, caused by a weak pound, prices under pressure and increased share of sneaker socks in the sales-mix. The prices of sneaker socks which have very low leg length, are 25% to 30% lower than men socks, but their profitability per unit of knitting capacity is in parity with men socks due to their reduced cost structure.

The export sales constituted 86.17% of total sales of your Company.

Domestic sales of your Company comprise mainly of contract manufacturing of socks supplied to Branded outlets, and also under the Company''s own Brand ''Lord Walker'' launched in the end of 2014. Under the own brand ''Lord Walker'', the Company supplies socks to some big cities through distributors and children socks to all

India branches of a very reputed shoe supplying brand. Domestic sales this year were the highest ever and stood at Rs. 324.34 lakh and posted a robust growth of 86%. This was achieved with increased contract manufacturing volumes of business from existing brands and also reaching out to new reputed brands. Gradually your Company is emerging as one of the premium quality supplier of socks to domestic outlets also. After exports, the domestic marketing is one more thrust area which your Company is striving to focus on, and thereby spread the risk of relying solely on export business.

Exchange Rate:

Your Company is predominantly an export unit and, therefore, vulnerable to fluctuations in exchange rates. There was a steep depreciation of the Great Britain Pound (GBP) in the aftermath of Brexit. The rupees per one GBP actually realized by your Company from pound currency export sales during the year were Rs.87.98 against Rs.98.63 of the previous year. This resulted in a loss of Rs.76.45 lakh in export value realization during the year.

The actual realized exchange rate of rupees to dollar by your Company remained in the bandwidth of Rs.64.44 to Rs.68.56 during the year against Rs.60.88 to 72.82 in the previous year.

Your Company follows a conservative and risk-averse approach towards managing its foreign currency exposure. Hence the Company endeavoured this year to further mitigate the risk associated with the exchange fluctuation by entering into forward contracts with the Company''s Bankers, else the losses due to exchange rates would have been higher.

Expenditure:

Raw materials constitute 37% of sales value of your Company. The prices of all raw materials, particularly of 20s combed cotton yarn, both dyed and melange, steadily escalated during the year. The prices of 20s black combed cotton yarn increased from Rs.334 per kg in April''16 to Rs.373 per kg in March''17. The price of 20/70 nylon covered elastane moved from Rs.515 per kg in April''16 to Rs.540 per kg in March''17. The price of 2/100 nylon 66 increased by Rs.70 per kg compared to last year. Such escalations adversely impacted the bottom line of the Company.

The employees'' remuneration expenses for the year were 4.67% higher in absolute terms.

At the plant level, the operational focus has been to reduce the cost of stores and spares, utilities (Power and Gas) and other overheads. Stores and spares expenses reduced by 8.05% in absolute terms. Utilities Cost remained almost flat as per last year despite the 9.05% higher knitting capacity utilization.

Overhead expenses (total expenses of the Company excluding raw materials, packing materials, depreciation and non-operating expenses) which include all manufacturing, marketing, administrative, financial and legal expenses of the Company went up by 1.48% over the last year. The knitting production increased by 11.53% and knitting capacity utilization enhanced by 9.05%. The increase in capacity utilization, with much improved efficiency helped better absorption of overheads, contributing to offset the impact of the adverse factors and cost escalations.

Profit before Tax:

The profit before tax stood at Rs.439 lakh as compared to Rs.448 lakh for the previous year, the variance, apart from the foreign exchange loss, being also on account of non-operating expenses like loss on sale of fixed assets and write off of store/spares of discarded machines during the year. The profit as a percentage of sales value stood at 18.71%, compared to 19.16% for the previous year. Notwithstanding numerous unfavourable factors like weak pound, pressure on prices and escalation in raw materials prices, it is really noteworthy for your Company to maintain the bottom line closely comparable with the previous year. This has been achieved by adopting several cost cutting initiatives, higher utilization of knitting machines capacity with improved efficiency, supported by marked benefit of economies of scale.

Your Company continues to be a preferred quality suppler of socks to top brands because of its strong attributes like products with internationally acclaimed quality norms, in time dispatches, quick communication and fast adaptability to the latest fashion market trends and innovations. One of the major strengths developed by your Company is the prompt submission of samples which works as a seeding process to promote and generate orders.

Capital Investments:

It has been the consistent policy of your Company to plough back a substantial part of surplus profits every year to revamp and upgrade mainly the knitting facilities to increase throughputs, improve product-mix and reduce cost of production.

The Company installed 24 latest model imported sock knitting machines in September''16 consisting of 12 very high productivity machines, and 12 knitting machines which have facilities to knit exclusive technical athletic socks for niche market. The benefit of increased throughput and reduction in operating cost were visible in the year just ended, and the Company expects significant further improvements in the coming year.

Twelve new Technical sock knitting machines have capability to knit mainly football/athletic socks for niche markets. Such socks are exclusive and difficult to copy by competitors due to the non availability of such equipment and expertise. Initial orders of such technical football socks have been exported through approved freight agents of the Company''s UK client to existing and newer geographies of the world.

Your Company is optimistic that this niche market business will gradually accelerate in future and finally leapfrog to bigger volumes with improved margins. Moreover it will differentiate your Company''s product-mix from other competitors.

The total capital outlay during the year was Rs.374.65 lakh, funded from the Company''s own accruals. Both imported and indigenous machines were purchased with zero percent excise/custom duty because your Company is operating under EPCG (Export Promotion Capital Goods) scheme where the obligation equivalent to six times of the duty saved is discharged by export of socks in a maximum of six years.

In next two years ie 2017-18 and 2018-19; your Company plans for modernizing and ploughing back funds to augment capacity and efficiencies, with top quality machines from overseas in replacement of old machines within almost the same infrastructural facilities in the knitting department. This will increase throughput, optimize cost and speed and cut down lead time of purchase orders. The capital investments are expected to leverage substantial growth in the bottom line of the Company in next two years.

The comparative performance highlights for last five years are as under:

Units

2016-17

2015-16

2014-15

2013-14

2012-13

Income Statement

Total Income

Rs. in lakh

2649.02

2639.24

2106.47

2251.20

2120.54

Export Sale

Rs. in lakh

2021.09

2165.28

1729.78

1923.53

1838.07

Operating EBITDA

Rs. in lakh

576.85

574.33

414.86

592.25

423.56

Net Profit before Tax

Rs. in lakh

438.95

448.17

302.18

486.60

328.47

Net Profit after Tax

Rs. in lakh

290.94

301.82

208.14

328.40

221.50

Cash Profit

Rs.in lakh

420.83

424.08

312.11

423.36

306.18

Balance Sheet

Net Worth

Rs. in lakh

1772.12

1481.18

1327.50

1232.36

1007.64

Capital Employed

Rs. in lakh

1745.14

1475.50

1303.97

1287.68

1042.83

Significant Ratios

Operating EBITDA/Net Sale

%

24.60

24.55

21.91

29.22

21.78

Return on Capital Employed (EBIT/Avg. CE)

%

27.94

32.77

24.84

44.37

34.10

Price Earning Ratio

18.28

12.58

12.09

6.00

4.00

Book Value Per Share

Rs.

35.99

30.08

26.96

25.03

20.47

Current Ratio

4.29

3.29

3.13

2.28

2.09

Operations

Knitting Production

Pairs in lakh

63.08

56.56

41.86

51.92

57.42

Pairs Dispatched

Pairs in lakh

60.20

55.13

43.45

49.64

55.30

Sales realization

Rs. per pair

38.97

42.44

43.57

40.83

35.36

Earning Per Share

Rs.

5.91

6.13

4.23

6.67

4.50

There is no change in the nature of business of your Company for the year under review.

Overview of the Economy:

India remains one of the fastest growing emerging market economies driven by key structural reforms, normal monsoons and reduced external vulnerabilities. The October / December''16 GDP estimates of seven percent growth indicate that key domestic risk of demonetization has not undermined the growth momentum and growth prospects for 2017-18. The consumer price inflation has declined from 6 percent in July 2016 to 3.81 percent in March 2017.

The Macroeconomic scenario looks quite bright with the Union Budget adopting a fiscal consolidation path having achieved the fiscal deficit target of 3.5 percent of GDP in the 2016-17 budget.

India''s merchandise exports which started showing negative growth from January 2015, for 19 months in a row entered positive territory in September 2016. There is positive growth of 4.71% at value of merchandise exports reaching USD 274.65 billion in the year under review. Exports are the main spring of fast growth of every healthy economy. All miracle economies in Asia with GDP growth of about 7% had export growth above 15%. Even as the economy has made progress, it has yet to show a positive impact to improve merchandise exports, accelerate the pace of manufacturing and industrial activity and more significantly create jobs for unemployed youth which is a big challenge to the country.

However, the implementation of policy reforms announced in the Union Budget, new initiatives taken and good ground work done to improve the economy will hopefully put India on an accelerating growth track and improve the business out look.

During the year, the Company carried out sales in the following geographical segments: (In Rs.)

Europe

UAE

Rest of World

India

Total

Revenues

136,377,944

53,520,605

12,210,572

32,433,542

234,542,663

Industry Structure and Development

The Indian Textile manufacturing sector including hosiery and clothing is the second largest in the world after China. India is amongst the few countries in the world which has manufacturing facilities across the entire value chain from fibre to finished products ie garments. Besides, there is ample availability of cotton, Nylon, elastane, and other raw materials in India.

Of the total exports of textiles, garments (which include socks also) constitute 35%, the balance exports of textile include cotton fibre, yarn, fabrics both cotton and manmade. It is only by increasing the percentage of garment production, that India can attain significant benefit of value addition and support the large Indian demography. India''s share in global textile export is only 5%, while that of China is 39%.

The Textiles industry continues to be the second largest employer after agriculture, providing employment to 45-50 million people and indirect employment to another 55-60 million people. It holds the potential to support the Indian demography making sure it''s in synchronisation with the economic growth.

Opportunities

Your Company is well poised to seize opportunities available to the sock knitting industry on account of its state-of-the-art production facilities, technical expertise, good quality culture and emphasis on product innovation and growth potential.

The socks produced by your Company are meeting the international quality norms of comfort, ease, convenience, stretch, sizing, skin care and other parameters essential for inner wear apparel. They also meet the fashion demands in terms of design, different knits and multiple shades. The socks manufactured by your Company are sold in super market chains and also in upper end retail stores.

Your Company has been consistently revamping and upgrading its technical infrastructure. During the year under review 24 new knitting machines were installed. Twelve high productivity knitting machines have enabled to improve cycle time and thereby reduce lead time. Other Twelve machines manufacture exclusive technical football socks which cater to niche high value luxury customers and which do not have many competitors. Importers are now looking at India as an alternative to China due to quality, cost competitiveness, better adherence to compliance and political stability. The other inherent advantages are the abundant availability of raw materials at competitive prices and favourable Government policies. Labour cost in India is lower than most competing countries except Bangladesh, Ethiopia and Kenya.

All major overseas customers of your Company insist on social audits to be carried out in the factory every year or once in every two years by internationally acclaimed ''''Business Social Compliance Initiative Agencies''''. Such audits cover compensation to employees, health, safety, environment and management practices. New customers also insist on such audits to be conducted, before they start the business. The compliance of such audits to international standards brings healthy and ethical culture in the working and creates goodwill of the Company among its existing clients. Your Company has successfully complied with many such audits and has thus ensured continuance of business with major clients for long periods. Such audits are an integral part of the export business.

Due to its quality culture, state-of the-art technical facilities, the domestic business of your Company has almost doubled in the last one year. This reflects that demand for quality socks is increasing in the domestic market also.

Your Company is maintaining a huge inventory of dyed yarn shades and types of raw materials like Organic cotton yarn, BCI cotton yarn, Mercerised yarn, Marl yarn, Melange yarn and twisted yarn etc. This helps your Company to accept any order because of the ready availability of raw material of different specifications.

Threats:

Socks exported from India to European Union countries (E.U.) attract 10.6% advolorem custom duty, whereas countries like Bangladesh, Sri Lanka and Vietnam being less developed are exempted from custom duty. Turkey, being the deemed member of the E.U. countries, besides enjoying exemption from custom duty, has the added advantage of reduced freight and reduced delivery time to the European markets. This has posed a threat to the Indian sock suppliers and may pressurize them to reduce prices.

The return of protectionism in advanced countries is likely to damage India''s export and its prospects of growth. The Great Britain Pound has depreciated in the aftermath of Brexit. Also prices of all raw materials, in particular that of dyed cotton yarns have escalated during the year under review. This has eroded the profitability of the Company. The overseas customers are not ready to increase the prices to make good the margin losses incurred by your Company.

Huge quantities of textile fabrics are exported from India to Bangladesh regularly to convert them in to garments of top brands there and re-export to many countries of the world. This is happening because of quota system, cheap labour and duty exemption available in Bangladesh, which has become a big hub of the garment industry. This is depriving many Indian youth from employment and of value addition to our country.

The skill and productivity of the workforce in India in both the private sector as well as the Government (through labour reforms) is not yet at levels prevailing in China and other countries.

FINANCE

As on the date of Balance Sheet, the Company is debt free in terms of long term loans, excepting loan on vehicles.

WORKING CAPITAL LOAN

The Company is enjoying export packing credit and foreign bill purchase facilities.

INSURANCE

The properties and insurable interests of your Company like buildings, plant and machinery, stocks etc. are adequately insured by the Company.

DIVIDEND

The Board of Directors of the Company has recommended a dividend of Rs.2.50 per share of Rs.10/- each (25%). The total dividend will absorb Rs.12,308,350 excluding Rs.2,505,980 (20.36%) as tax on dividend. The dividend will be free of tax in the hands of the shareholders of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Arun Sanghi resigned as the Chairman of the Board of Directors of the Company with effect from 22.09.2016. The Board of Directors places on record their appreciation of the meritorious contribution and dynamic leadership of Mr. Arun Sanghi during his tenure of Chairmanship for five years. During these five years, the profit of the Company has substantially improved. He was always available for support and guidance. The Board of Directors appointed Mr. Vijay Merchant as the Chairman of the Company in place of Mr. Arun S Sanghi with effect from 22.09.2016. The Board of Directors appreciates the long association and valuable contribution made by Mr. Vijay Merchant to the Company.

BOARD OF DIRECTORS

The Company has a broad based Board of Directors, duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. There is one Woman Director on the Board. The changes in the composition of the Board of Directors are carried out in compliance with the provisions of the Act.

Policy formulations, setting up of goals, evaluations of performance and control functions vest with the Board. The composition of the Board of Directors of the Company as on March 31, 2017 was as follows;

Sr. No.

Name of the Director

Category

1.

Mr. Vijay V. Merchant

Chairman Non-Executive

2.

Mr. Arun S. Sanghi

Independent Director

3.

Mr. Adi F. Madan

Managing Director

4.

Mr. Ajit P. Walwaikar

Independent Director

5.

Mr. Harish H. Shah

Independent Director

6.

Mrs. Ayesha K. DadyBurjor

Whole-time Director

7.

Mr. Vinay Sanghi

Independent Director

8.

Mr. Kaizad DadyBurjor

Non-Executive Director

9.

Mr. Pheroze A. Dhanbhoora

Non-Executive Director

BOARD MEETINGS

Regular meetings of the Board of Directors are held to discuss and decide on various business policies, strategies and other business. Due to business exigencies, sometimes business decisions are taken by the Board through circulation.

The Board met five (5) times during the FY 2016 - 17, on Following dates.

24/05/2016

11/08/2016

22/09/2016

10/11/2016

09/02/2017

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Independent Directors have submitted the Declaration of Independence, as required pursuant to section 149(7) of the Companies Act 2013, stating that they meet the criteria of independence as provided in subsection (6).

COMPOSITION OF AUDIT COMMITEE

Mr. Arun S Sanghi resigned from the Chairmanship of the Audit Committee with effect from 11-11-2016, even though he will continue as a member of the Audit Committee. All the Members of the Board and specially those of the Audit Committee highly appreciated Mr. Sanghi''s intense analytical approach to go into the depth of every issue whether financial, commercial, technical, personnel, and cost cutting, and seek a solution of the same. Mr. Sanghi believed in Budgetary Controls. He assigned ambitious targets to achieve and motivated the management team to fulfill the same.

Mr. Adi F Madan, Managing Director proposed the name Mr. Ajit P. Walwaikar as the Chairman of the Audit Committee. All the members of the Board unanimously seconded the appointment of Mr. Ajit P. Walwaikar as the new Chairman of the Audit Committee. Mr. Adi F. Madan informed the Board that Mr. Ajit P. Walwaikar has a very long association with the Company and he is a senior Member on the Audit Committee with vast knowledge and experience in the legal and secretarial matters. He has been providing valuable advice to the Company as and when required. All Members of the Board expressed that the Audit Committee will function smoothly under the Chairmanship of Mr. Ajit P. Walwaikar.

During the Board of Directors meeting held on 9th February, 2017; Mr. Ajit P. Walwaikar proposed that Mr. Vijay Merchant be included as a member of the Audit Committee of the Company. All the board members unanimously agreed with the proposal and expressed that Mr. Vijay Merchant''s inclusion in the Audit Committee of the Company will be highly beneficial, keeping in view his long experience.

The Board has constituted an Audit Committee comprising of three Independent Directors and two Directors totaling five members. The Audit Committee reviews reports including significant audit observations and follow-up actions thereon. The Audit Committee also meets the Company''s Statutory Auditors to ascertain their views on the financial statement. The Committee members meet regularly and make their recommendations in accordance with the terms of reference specified by the Board. Such recommendations are thoroughly discussed in Board meetings and by and large accepted for implementation.

The names of Committee members are as under;

Mr. Ajit P. Walwaikar - Chairman

Mr. Arun S. Sanghi - Member

Mr. Vijay V. Merchant - Member

Mr. Harish H. Shah - Member

Mr. Pheroze A. Dhanbhoora - Member

All the members of the Audit Committee are financially literate and bring in expertise in the fields of Finance, Taxation, Technical, Secretarial and Legal issues.

NOMINATION AND REMUNERATION COMMITTEE

The Board has constituted a Nomination and Remuneration Committee consisting of three Independent Directors. The names of Committee members are as under;

Mr. Ajit P. Walwaikar - Chairman

Mr. Arun S. Sanghi - Member

Mr. Harish H. Shah - Member

The Committee has the mandate to recommend appointment/re-appointment of Executive Directors and appointment of employees from the level of Vice-President and above along with the remuneration to be paid to them. The remuneration is fixed keeping in mind the person''s track record, his/her potential, individual performance, the market trends and scales prevailing in the similar industry.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Board has constituted a Stakeholder Relationship Committee consisting of three Directors, two independent Directors and the Managing Director.

The names of Committee members are as under;

Mr. Arun S. Sanghi - Chairman

Mr. Adi F. Madan - Member

Mr. Ajit P. Walwaikar - Member

The Company Secretary is designated as the "Compliance Officer" who oversees the redressal of the Investors'' grievances.

The Committee meets to approve share transfers, transmission, issue of duplicate share certificates, rematerialization of shares and all other issues pertaining to shares and also to redress investor grievances like non-receipt of dividend warrants, non-receipt of share certificates, etc. The committee regularly reviews the movement in shareholding and ownership structure. The committee also reviews the performance of the Registrar and Transfer Agents.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Fraud and corruption free work culture has been the core of the Company. In view of the potential risk of fraud, corruption and unethical behavior, which could adversely impact the Company''s business operations, the company has an established mechanism for Directors/Employees to report concerns about unethical behavior, actual or suspected fraud or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of Directors/employees who avail of the mechanism. The company affirms that no personnel have been denied access to the audit committee. The company has formulated a Policy of Vigil Mechanism and has established a mechanism that any personnel may raise Reportable Matters within 60 days after becoming aware of the same. All suspected violations and Reportable Matters are reported to the Chairman of the Audit Committee. The key directions/actions are informed to the Managing Director of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

In pursuance of section 134 (5) of the Companies Act, 2013, the Board of Directors hereby confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

(b) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March 2017 and of the profit and loss of the Company for the period ended 31st March 2017;

(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) The Directors had prepared the annual accounts on a going concern basis;

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

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

SUBSIDIARIES

As the Company has no subsidiaries, Section 129(3) of the Companies Act, 2013, does not apply.

EXTRACT OF ANNUAL RETURN

Pursuant to sub-section 3(a) of section 134 and sub-section (3) of section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 2017 forms part of this report as Annexure I.

AUDITORS

In terms of the Resolution passed at the 24th Annual General Meeting of the Company, M/S. Deloitte Haskins & Sells, Chartered Accountants (Firm registration No.- 117364W) were appointed as the Statutory Auditors of the Company for the period of three years 2014-15, 2015-16 and 2016-17. They were to hold the office from the conclusion of the 24th Annual General Meeting until the conclusion of the 27th Annual General Meeting. This became necessary due to rotational clause pursuant to the provision of Section 139 and other applicable provision if any of the Companies Act, 2013.

The Board places on record its appreciation for the contribution of M/S. Deloitte Haskins & Sells, Chartered Accountants, during their tenure as the Statutory Auditors of your Company.

The Company is proposing to appoint M/s. B. K. Khare & Co, Chartered Accountants (Firm Registration No. 105102W), as Statutory Auditors for a period of 5 years commencing from the conclusion of the 27th Annual general meeting till the conclusion of the 32nd Annual General meeting. M/s. B. K. Khare & Co, Chartered Accountants have consented to the said appointment, and confirmed that their appointment, if made, would be within the limits mentioned under Section 141(3)(g) of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014.

The Auditors'' Report to the Shareholders for the year under review does not contain any qualification.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

Mr. A. J. Gandhi practicing Company Secretary was appointed as a Secretarial Auditor under the provision of section 204 of the Companies Act 2013 for the financial year 2016 - 17, during the Board Meeting held on 24th May 2016. The report of the secretarial auditor for the F.Y. 2016 - 17 is annexed to this report as Annexure - II. The report does not contain any qualification.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOING

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 for the F.Y. 2016-17 is annexed and forms part of this Report as Annexure - III.

DETAILS RELATING TO DEPOSITS

The Company has not accepted any deposit during the year, nor has any deposit remained unpaid or unclaimed as at the end of the year.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

No significant and material orders were passed by the regulators or Courts or Tribunals during the year, which would adversely impact the Company''s operation in future.

INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY

The existing internal financial controls are commensurate with the nature, size, complexity and business processes followed by the Company. They have been reviewed and found generally satisfactory on the following key control matrices.

a) Entity Level Control

b) Financial Control

c) Operational Control

which included authority and organization matrix, risk management practices, compliance framework within the origination, ethics and fraud risk management, management Information system, self assessment of control point, business continuity and disaster recovery planning, budgetary system etc.

Section 134(5)(e) of the Companies Act, 2013 requires the submission of a report by the Board of Directors of a listed Company which includes a statement ensuring that the Company has laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and operating effectively.

During the year, the Company prepared Policy Documents with regard to Internal Financial Control, along with Risk Control Matrix. The same have been tested by internal auditors and statutory auditors.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Your Company has not-

- given any loan to any person or other body corporate,

- given any guarantee and provided any security in connection with a loan to any other body corporate or any person.

- acquired by way of subscription, purchase or otherwise the securities of any other body corporate otherwise than in accordance with the law.

TRANSFER OF UNCLAIMED DIVIDEND

In the F.Y. 2009-10, the Company declared Final dividend of 8% (^ 0.80 per share of ^ 10 each) in September, 2010, by the shareholders in Annual General Meeting.

Since seven years have elapsed, the unclaimed dividend of X 1,47,061 of the F.Y. 2009-10 is to be transferred to the Investor Education and Protection Fund, established by the Central Government, in compliance with sections 124 and 125 of the Companies Act, 2013 (corresponding to section 205A and 205C of the Companies Act, 1956).

RISK MANAGEMENT:

A documented risk management policy is in place as per section 134(3)(n) of the Companies Act 2013.

Your Company is exposed to risk from fluctuation of foreign exchange rates, market Economic slow down or decline in demand in the country of buyers of your Company''s products, prices of raw materials and finished goods, compliances risk and people risk.

Foreign Exchange Risk:

During year under review the Company endeavoured to further mitigate the risk associated with the exchange fluctuations by entering into Forward Contracts with the Company''s Bankers, on very conservative and risk-averse basis.

Commodity Prices Risk:

Your Company proactively manages the risk of purchasing raw materials through forward booking, vendor development practices and inventory management. The Company''s strong reputation for quality and services with overseas clients to some extent mitigates the impact of price risk on finished goods.

Compliance Risk:

Your company has to follow various statutes and regulations including the Companies Act. The company is mitigating these risks through regular review of legal compliances carried out through internal as well as external compliance audits.

People Risk:

Your Company nurtures and grooms the talented and key personnel for future business leadership and looks after them judiciously so that they stay with the Company.

CORPORATE SOCIAL RESPONSIBILITY

Section 135(1) of the Companies Act, 2013, is not applicable to your Company, because the net worth, turnover and net profit of your Company during the year is less than the required limits.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered during the financial year were in the ordinary course of the business of your Company and were on arm''s length basis. There were no materially significant related party transactions entered by your Company with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of your Company. The details are given in Annexure - IV, forming part of this report.

FORMAL ANNUAL EVALUATION

During the year, the Board adopted a formal mechanism for evaluating its performance and as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Board functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of individual Directors including the Board Chairman who were evaluated on parameters such as attendance, contribution at the meetings and otherwise, independent judgment, safeguarding of minority shareholders interest etc.

MEETING OF INDEPENDENT DIRECTORS

All the five independent Directors of the Company held a meeting on 09th February 2017, and reviewed the performance of non-independent Directors and the Board as a whole. They also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board.

They expressed their satisfaction at the performance of non-independent Directors and appreciated the flow of information from the Company management.

COST AUDITORS

The Companies (Cost Records and Audit) Rules, 2014 does not require textile industry to have cost audit records. Moreover, in terms of Rule 7, where the revenue of a company from exports, in foreign exchange, exceeds seventy five percent of its total revenue, the said company is also exempted from maintaining cost audit records. The above rules were notified on 30.06.2014. In view of the above, the Company is exempted from maintaining Cost Audit records and appointment of Cost Auditor for the financial year 2016-17.

RATIO OF REMUNERATION TO EACH DIRECTOR

The ratio of the remuneration of each director to the median employee''s remuneration and other details in terms of sub-section 12 of section 197 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming a part of this Report as Annexure V of this report.

LISTING FEES

Your Company has paid the listing fees up to 31st March 2018 to the Bombay Stock Exchange on 11th April 2017.

CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION

Your Company shall not be mandatorily required to submit Corporate Governance Report as the equity share capital and net worth of the Company is less than required limits as on the last date of the previous financial year. Provided that where the provision of the Act becomes applicable to the Company at a later date, the Company shall comply with the requirement within six month from the date on which the provisions become applicable to the Company.

ANTI SEXUAL HARASSMENT POLICY

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of ''The Sexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding Sexual Harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The Lady NGO representative is the member of the said Internal Complaints Committee and regularly attends the meetings which are minuted. The following is a summary of Sexual Harassment complaints received and disposed of during the year 2016-17:

No. of complaints received: Nil

No. of complaints disposed of: Not applicable

PARTICULARS OF EMPLOYEES

As per provision of Section 197 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, particulars of the employees are required to be annexed in respect of the employees of the Company who were in receipt of total remuneration of ^ 60.00 Lac per annum or ? 5.00 Lac per month. During the financial year 2016 - 17, there is no employee drawing remuneration as above.

ACKNOWLEDGMENT

Your Directors wish to place on record their sincere appreciation for the co-operation and support extended to the Company by the Government of India, the Gujarat State Government and by the relevant Government Authorities, Central, State and Local, the Company''s Bankers and the Business Associates.

Your Directors also thank all the employees at every level, who, through their dedication, co-operation and support, have enabled the Company to achieve sustained growth.

And to you, our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the Board of Directors

Place: Mumbai, Vijay V. Merchant

Date : 04th May, 2017. Chairman


Mar 31, 2016

DIRECTORS'' REPORT

The Directors are pleased to present the 26th Annual Report together with the Audited Statement of Accounts for the year ended 31 March, 2016.

FINANCIAL RESULTS AND ACCOUNTS:

The Financial Results are as under:

(Rs. in Lacs)

Year ended

31 March, 2016

Year ended

31 March, 2015

Gross Income

2639.24

2106.47

Profit Before Interest and Depreciation

574.33

414.86

Finance Charges

3.89

8.70

Gross Profit before Depreciation

570.43

406.16

Provision for Depreciation

122.26

103.98

Net Profit Before Tax

448.17

302.18

Provision for Tax

146.35

94.04

Net Profit After Tax

301.82

208.14

Balance of Profit brought forward

766.96

692.64

Depreciation on transition to Schedule II of the Companies Act, 2013 on tangible fixed assets with nil remaining useful life

(6.23)

Balance available for appropriation

1068.78

894.55

Proposed Dividend on Equity Shares (Rs. 2.50 per Equity Share, previous year Rs. 1.80 per Equity Share)

123.09

88.62

Tax on proposed Dividend

25.06

18.15

Transfer to General Reserve

30.18

20.82

Surplus carried to Balance Sheet

890.45

766.96

OPERATIONS:

Your Company achieved a commendable performance and recorded a top-line growth of 23.61% over the previous year. Total Sales stood at Rs. 23.40 crore, the highest achieved since Company''s inception, as against Rs. 18.93 crore in the previous year. The export sales constituted 92.32% of total sales, registering a growth of 25.17% over the previous year. The increase in sales was driven by volume growth in export orders at a very encouraging pace, in particular a much increased share of sneaker and children socks in the sales-mix.

Against the back drop of global headwinds of economic uncertainty sweeping across major parts of the world and India''s merchandise exports declining to US $ 261 billion from Us $ 310 billion in the previous year, recording negative growth of 15.81%; the performance of your Company on the export sales front is noteworthy. The inspiring achievement is the result of trust and confidence reposed by the overseas clients in your Company''s quality of products, timely deliveries, fast adaptability to latest fashion market trends and innovations, and prompt submission of samples which works as a seeding process to promote and generate orders.

Domestic Sales of your Company comprise mainly of contract manufacturing of socks supplied to Branded outlets, and also under the Company''s own brand "Lord Walker" launched in the end of 2014. Under the own brand "Lord Walker", the Company supplies socks to some big cities through distributors; children socks to all India branches of a very reputed shoes supplying brand, and through online with e-commerce portals. Efforts are underway to penetrate into other metro and big cities through distributors and by deployment of market experienced manpower to enhance sales volume.

Commensurate with the higher sales and also the impact of favorable exchange rates caused by weakening of Rs. (rupee) against US Dollar (USD) and Great Britain Pound (GBP), your Company achieved a stellar improvement in profit before tax of 48.31% over the previous year, after absorbing all cost escalations such as increase in wages/salaries, in particular impact of amendment in payment of Bonus Act dated 31.12.2015 retrospectively effective from 01.04.2014, resulting in additional liability of Rs. 31.00 lacs, increase in electricity power rates, and other overhead costs. The profit before tax stood at Rs. 448.17 lacs against Rs. 302.18 lacs in the previous year.

During the year under review, your Company purchased twelve new knitting machines to meet the emerging needs of export market; installed equipments to strictly adhere to environmental and safety measures and also equipments for better material handling and storage of goods in the factory. The total capital outlay was Rs. 185.92 lacs.

In the current year, your Company ventures to make investment to purchase specialized knitting machines capable of knitting socks which are more technical, and which will realize better prices and margins. Such socks will be difficult to manufacture by other competitors due to non availability of such equipment and expertise. Such socks will cater to niche high value luxury customers. The orders for such machines have been placed and preparatory work is being attended to.

Exports will continue to be the main thrust area of your Company because export clients offer large size orders, which result in better plant efficiency, improvement in quality and better management of inventory as your Company is mainly order driven and manufactures requisite quantity of socks as per orders, with no remnants or surplus left. Exports create better quality culture in the work place. There is assured security in recovery of export receivables. However, it is expected that sales in the local market will also play an increasingly important role in the future.

The comparative performance highlights for last five years are as under:

Units

2015-16

2014-15

2013-14

2012-13

2011-12

Total Income

Rs. in lac

2639.24

2106.47

2251.20

2120.54

1685.23

Export Sale

Rs. in lac

2165.26

1729.78

1923.53

1838.07

1449.10

Net Profit before Tax

Rs. in lac

448.17

302.18

486.60

328.47

201.02

Net Profit after Tax

Rs. in lac

301.82

208.14

328.40

221.50

139.20

Cash Profit

Rs. in lac

424.08

312.11

423.36

306.18

218.76

Knitting Production

Pairs in lac

56.56

41.86

51.92

57.42

45.38

Pairs Dispatched

Pairs in lac

55.13

43.45

49.64

55.30

46.78

Sales realization per pair

42.44

43.57

40.83

35.36

32.81

Earning Per Share

6.13

4.23

6.67

4.50

2.83

There is no change in the nature of business of your Company for the year under review.

Overview of the Economy:

The Indian Economy has certainly performed creditably compared to most developed and emerging markets of the world in the year under review. As per the latest GDP growth estimates, the Indian Economy performed well at 7.6%. The macroeconomic condition is stable, consumer price inflation is well under control and wholesale price inflation is in negative territory.

Even as the economy has made progress, this has yet to show a positive impact on significant demand revival and improved corporate earnings. Merchandise exports from India declined, expected consumer demand push did not happen, markets lacked buoyancy, employment prospects were sluggish and manufacturing activity -including core sector was subdued.

However, the implementation of policy reforms announced, new initiatives taken and good ground work done to improve the economy will hopefully put India on an accelerating growth track and improve the business outlook.

During the year, the Company carried out sales in the following geographical segments: (In

United Kingdom

Switzerland

UAE

India

Rest of the World

Total

Revenues

8,07,53,123

8,57,55,655

4,01,74,252

1,74,39,453

98,45,407

23,39,67,890

Industry Structure and Development

The Indian textile industry including hosiery and clothing is one of the leading sectors of the Indian economy and contributes significantly to the country''s industrial output (14%). It employs 55 million people and is the second largest employer after agriculture. In the year under review, the textile and apparel exports from India touched US $ 40 billion amounting to 15% of India''s total exports. Overall it contributes 6% of India''s GDP. Textiles and apparel industry is the second largest employer of India and also one of the key focus sectors under Government''s "Make In India" campaign. It is a testimony to the huge growth potential that the industry holds both in terms of infrastructure development and skill improvement. Globally, favorable trade policy reforms would allow the industry to expand its trade partners, improve export competitiveness and employment opportunities to unemployed youth which is the biggest need of the hour.

Textiles and apparels exported from India consume mainly indigenous inputs which are available in rich abundance including skilled labour and talent. Thus textiles are the big earner of net foreign exchange. This helps the country reduce its current account deficit.

Opportunities

Your Company has been manufacturing premium quality socks for export markets for two decades since its inception. The socks are being supplied to top end markets of Europe and Gulf Countries. This has resulted in creating good quality culture conducive to manufacture excellent quality socks. Hence your Company is well poised to seize opportunities available in socks knitting industry on account of its state-of-the art production facilities, technical expertise and emphasis on product innovation and growth potential. Your company is meeting international norms of comfort, stretch, sizing, skin care and other parameters essential for inner wear apparel. In view of the strengths mentioned, your Company is a preferred premium quality supplier of socks to top brands and maintains its continuous design and product improvement and strong emphasis on customer services.

Your Company started commercial production of socks in the year 1996, and has thus completed twenty years of its existence as a socks manufacturer cum exporter. It is heartening to mention that your Company has been able to retain the patronage of some export clients with increasing volumes of business since the start of socks manufacturing in the Company.

Some export clients place small size orders for exclusive designs, with much remunerative prices, resulting in much higher than average contribution margin after considering machine down time. Your Company has been accepting such orders to boost the bottom line.

In the Foreign Trade Policy 2015-2020, the export obligation for domestic procurement of capital goods under EPCG has been reduced from 90% to 75%. Your Company has been availing of this benefit for domestic capital goods. Also in case of imported capital goods if 75% or more of specific export obligation, and 100% Average Export Obligation till date, is fulfilled in half or less than half the original export obligation period specified; remaining export obligation shall be condoned and Authorization redeemed by regional authorities concerned. Your Company has always met the Export obligation, well in time.

Threats:

Socks exported from India to European Union countries (E.U.) attract 10.6% custom duty; whereas countries like Bangladesh, Sri Lanka and Vietnam being less developed are exempted from custom duty. Turkey, being the deemed member of the E.U. countries, besides enjoying exemption from custom duty, has added advantage of reduced freight and reduced delivery time to the European markets. This has posed a threat to the Indian socks suppliers and may pressurize them to reduce prices.

With the downturn of economy of China, after three decades of red hot expansion, there were expectations that the business will shift from China to India in case of textiles, garments and hosiery items due to cost and stability factors. It seems this business has been more or less grabbed by above mentioned countries due to duty benefit, as exports of textiles and apparels from India remained stagnant at US $ 40 billion in the year under review.

Recently Turkey has allowed duty free imports of textiles fabrics and apparels from Pakistan and hence India will have to face competition from Pakistan.

Textiles, garments and hosiery are labour and power intensive industries. Continuous rise in the prices of these inputs will pose a major threat on operating margin.

Some small factories with 10 to 15 low cost Chinese socks knitting machines have mushroomed in the last one to two years. They are supplying cheap socks and posing competition to big organized units.

FINANCE

As on the date of Balance Sheet, the Company is debt free in terms of long term loans, excepting loan on vehicles.

WORKING CAPITAL LOAN

The Company is enjoying export packing credit and foreign bill purchase facilities.

INSURANCE

All the assets of the Company have been adequately insured.

DIVIDEND

The Board of Directors of the Company has recommended a dividend of Rs. 2.50 per share of Rs. 10/- each (25%). The total dividend will absorb Rs. 12,308,350 excluding Rs. 2,505,980 (20.36%) as tax on dividend. The dividend will be free of tax in the hands of the shareholders of the Company.

BOARD OF DIRECTORS

The Company has a broad based Board of Directors, duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors are carried out in compliance with the provisions of the Act.

Policy formulations, setting up of goals, evaluations of performance and control functions vest with the Board. The composition of the Board of Directors of the Company as on March 31, 2016 was as follows:

Sr. No.

Name of the Director

Category

1

Mr. Arun S. Sanghi

Chairman, Independent Director

2

Mr. Adi F. Madan

Managing Director

3

Mrs. Ayesha K. DadyBurjor

Whole-time Director

4

Mr. Ajit P. Walwaikar

Independent Director

5

Mr. Harish H. Shah

Independent Director

6

Mr. Vinay V. Sanghi

Independent Director

7

Mr. Kaizad R. DadyBurjor

Additional Director

8

Mr. Pheroze A. Dhanbhoora

Additional Director

9

Mr. Vijay V. Merchant

Additional Director

BOARD MEETINGS

Regular meetings of the Board of Directors are held to discuss and decide on various business policies, strategies and other business. Due to business exigencies, sometimes business decisions are taken by the Board through circulation.

The Board met five (5) times during the FY 2015-16, viz. on May 29, 2015, August 13, 2015, September 3, 2015, November 4, 2015 and February 12, 2016.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Kaizad R. DadyBurjor was appointed as an Additional Director of the Company under section 161 of the Companies Act, 2013, in the meeting of the Board of Directors held on 3rd September 2015. He will be reappointed as a Director subject to retirement by rotation by the shareholders in the Annual General Meeting to be held on 22nd September, 2016.

Mr. Pheroze A. Dhanbhoora was appointed as an Additional Director of the Company under section 161 of the Companies Act, 2013, in the meeting of the Board of Directors held on 4th November 2015. He will be reappointed as a Director subject to retirement by rotation by the shareholders in the Annual General Meeting to be held on 22nd September, 2016.

Mr. Pheroze A. Dhanbhoora was also appointed as the member of the Audit Committee of the Company by the Board of Directors.

Mr. Vijay V. Merchant was appointed as an Additional Director of the Company under section 161 of the Companies Act, 2013, in the meeting of the Board of Directors held on 12th February 2016. He will be reappointed as a Director subject to retirement by rotation by the shareholders in the Annual General Meeting to be held on 22nd September, 2016.

No Director is retiring by rotation in the ensuing AGM since there is none continuing of the yesteryears. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Independent Directors have submitted the Declaration of Independence, as required pursuant to section 149(7) of the Companies Act 2013, stating that they meet the criteria of independence as provided in subsection (6).

COMPOSITION OF AUDIT COMMITEE

The Board has constituted an Audit Committee comprising of three Independent Directors and one Additional Director totaling four members. The Audit Committee reviews reports including significant audit observations and follow-up actions thereon. The Audit Committee also meets the Company''s Statutory Auditors to ascertain their views on financial statement. The Committee members meet regularly and make their recommendations in accordance with the terms of reference specified by the Board. Such recommendations are thoroughly discussed in Board meetings and by and large accepted for implementation.

Their names are as under;

Mr. Arun S. Sanghi - Chairman

Mr. Ajit P. Walwaikar - Member

Mr. Harish H. Shah - Member

Mr. Phiroze A. Dhanbhoora - Member

All the members of the Audit Committee are financially literate and bring in expertise in the fields of Finance, Taxation, Secretarial and Legal issues.

NOMINATION AND REMUNERATION COMMITTEE

The Board has constituted the Nomination and Remuneration Committee consisting of three Independent Directors.

Their names are as under;

Mr. Ajit P. Walwaikar - Chairman

Mr. Arun S. Sanghi - Member

Mr. Harish H. Shah - Member

The Committee has the mandate to recommend appointment/re-appointment of Executive Directors and appointment of employees from the level of Vice-President and above along with remuneration to be paid to them. The remuneration is fixed keeping in mind the person''s track record, his/her potential, individual performance, the market trends and scales prevailing in the similar industry.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Board has constituted Stakeholder Relationship Committee consisting of three Directors, two independent Directors and the Managing Director.

Their names are as under;

Mr. Arun S. Sanghi - Chairman

Mr. Adi F. Madan - Member

Mr. Ajit P. Walwaikar - Member

The Committee meets regularly to approve share transfers, transmission, issue of duplicate share certificates, re-materialization of shares and all other issues pertaining to shares and also to redress investor grievances like non-receipt of dividend warrants, non-receipt of share certificates, etc. The committee regularly reviews the movement in shareholding and ownership structure. The committee also reviews the performance of the Registrar and Transfer Agents.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has an established mechanism for Directors/Employees to report concerns about unethical behavior, actual or suspected fraud or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of Directors/employees who avail of the mechanism. The company affirms that no personnel have been denied access to the audit committee. The Company has formulated a Policy of Vigil

Mechanism and has established a mechanism that any personnel may raise Reportable Matters within 60 days after becoming aware of the same. All suspected violations and Reportable Matters are reported to the Chairman of the Audit Committee. The key directions/actions are informed to the Managing Director of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

In pursuance of section 134 (5) of the Companies Act, 2013, the Board of Directors hereby confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March 2016 and of the profit and loss of the Company for the period ended 31st March 2016;

(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The Directors had prepared the annual accounts on a going concern basis;

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

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

SUBSIDIARIES

As the Company has no subsidiaries, Section 129(3) of the Companies Act, 2013, does not apply. In the F.Y. 2013-14, the Company had subscribed to 30% of the Partners'' Capital in Armayesh Enterprise LLP. The Company withdrew and retired from the said partnership with Armayesh Enterprise LLP with effect from 31st October 2015.

EXTRACT OF ANNUAL RETURN

Pursuant to sub-section 3(a) of section 134 and sub-section (3) of section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 2016 forms part of this report as Annexure I.

AUDITORS

As per Resolution passed at the 24th Annual General meeting, M/s. Deloitte Haskins and Sells, Chartered Accountants, have been appointed as Statutory Auditors for the financial years 2014-15, 2015-16 and 2016-17. The said appointment, on an annual basis, is being ratified in the ensuing Annual General Meeting.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

Mr. A. J. Gandhi practicing Company Secretary was appointed as a Secretarial Auditor under the provision of section 204 of the Companies Act, 2013 for the financial year 2015-16, during the Board Meeting held on 29th May 2015. The report of the secretarial auditor for the F.Y. 2015-16 is annexed to this report as Annexure - II. The report does not contain any qualification.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOING

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 for the F.Y. 2015-16 is annexed and forms part of this Report as Annexure - III.

DETAILS RELATING TO DEPOSITS

The Company has not accepted any deposit during the year, nor any deposit has remained unpaid or unclaimed as at the end of the year.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

No significant and material orders were passed by the regulators or Courts or Tribunals during the year, adversely impacting the Company''s operation in future.

INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY

A strong internal control culture is pervasive in your Company. Your Company has documented a robust and comprehensive internal control system for all the major processes to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals and compliance with policies, procedures, laws and regulations.

Your Company believes in formulating adequate and effective internal control systems and implementing the same to ensure that assets and interests of the Company are safeguarded and reliability of accounting data and accuracy are ensured with proper checks and balances. The Internal control system is improved and modified continuously to meet the changes in business conditions, statutory and accounting requirements. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control system and suggests improvements for strengthening them. The Company has a sound Management Information System which is an integral part of the control mechanism. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken.

Section 134(5)(e) of the Companies Act, 2013 requires the submission of a report by the Board of Directors of a listed Company which includes a statement ensuring that the Company has laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and operating effectively.

During the year, the Company prepared Policy Documents with regard to Internal Financial Control, along with Risk Control Matrix. The same have been tested by internal auditors and statutory auditors.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Your Company has not-

- given any loan to any person or other body corporate

- given any guarantee and provided any security in connection with a loan to any other body corporate or any person

- acquired by way of subscription, purchase or otherwise the securities of any other body corporate otherwise than in accordance with the law.

TRANSFER OF UNCLAIMED DIVIDEND

In the F.Y. 2008-09, the Company declared interim dividend of 5% (Rs. 0.50 per share of Rs. 10 each) in January 2009, which was subsequently approved by the shareholders in Annual General Meeting, as the final dividend for the F.Y. 2008-09.

Since seven years have elapsed, the unclaimed dividend of Rs. 99,151 of the F.Y. 2008-09 has been transferred to the Investor Education and Protection Fund, established by the Central Government, in compliance with sections 124 and 125 of the Companies Act, 2013 (corresponding to section 205A and 205C of the Companies Act, 1956).

RISK MANAGEMENT:

A documented risk management policy is in place as per section 134(3)(n) of the Companies Act 2013.

Your Company is exposed to risk from fluctuation of foreign exchange rates, market Economic slowdown or decline in demand in the country of buyers of your Company''s products, prices of raw materials and finished goods, compliances risk and people risk.

Foreign Exchange Risk:

Your Company manages its foreign exchange risk within the framework laid down by Company''s policy, approved by the Board, keeping in mind the size of the Company.

Commodity Prices Risk:

Your Company proactively manages the risk of purchasing raw materials through forward booking, vendor development practices and inventory management. The Company''s strong reputation for quality and services with overseas clients mitigates the impact of price risk on finished goods.

Compliance Risk:

Your company has to follow various statutes and regulations including the Companies Act. The company is mitigating these risks through regular review of legal compliances carried out through internal as well as external compliance audits.

People Risk:

Your Company nurtures and grooms the talented and key personnel for future business leadership and looks after them judiciously so that they stay with the Company.

CORPORATE SOCIAL RESPONSIBILITY

Section 135(1) of the Companies Act, 2013, is not applicable to your Company, because the net worth, turnover and net profit of your Company during the year is less than the required limits.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered during the financial year were in the ordinary course of the business of your Company and were on arm''s length basis. There were no materially significant related party transactions entered by your Company with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of your Company. The details are given in Annexure - IV, forming part of this report.

FORMAL ANNUAL EVALUATION

During the year, the Board adopted a formal mechanism for evaluating its performance and as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Board functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of individual Directors including the Board Chairman who were evaluated on parameters such as attendance, contribution at the meetings and otherwise, independent judgment, safeguarding of minority shareholders interest, etc.

MEETING OF INDEPENDENT DIRECTORS

All the four Independent Directors of the Company held a meeting on 12th February 2016, and reviewed the performance of non-independent Directors and the Board as a whole. They also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board.

They expressed their satisfaction at the performance of non-independent Directors and appreciated the flow of information from the Company management.

COST AUDITORS

The Companies (Cost Records and Audit) Rules, 2014 does not require textile industry to have cost audit records. Moreover, in terms of Rule 7, where the revenue of a company from exports, in foreign exchange, exceeds seventy five percent of its total revenue, the said company is also exempted from maintaining cost audit records. The above rules were notified on 30.06.2014. In view of the above, the Company is exempted from maintaining Cost Audit records and appointment of Cost Auditor for the financial year 2015-16.

RATIO OF REMUNERATION TO EACH DIRECTOR

The ratio of the remuneration of each Director to the median employee''s remuneration and other details in terms of sub-section 12 of section 197 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this Report as Annexure V of this report.

LISTING FEES

Your Company has paid listing fees up to 31st March 2017 to the Bombay Stock Exchange on 13th April 2016. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION

Your Company shall not be mandatorily required to submit Corporate Governance Report as the equity share capital and net worth of the Company is less than required limits as on the last date of the previous financial year. Provided that where the provision of the Act becomes applicable to the Company at a later date, the Company shall comply with the requirement within six month from the date on which the provisions become applicable to the Company.

ANTI SEXUAL HARASSMENT POLICY

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

The following is a summary of Sexual Harassment complaints received and disposed of during the year 2015-16:

No. of complaints received: Nil

No. of complaints disposed of: Not applicable

PARTICULARS OF EMPLOYEES

As per provision of Section 197 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, particulars of the employees are required to be annexed in respect of the employees of the Company who were in receipt of total remuneration of Rs. 60.00 Lac per annum or Rs. 5.00 Lac per month. During the financial year 2015-16, there is no employee drawing remuneration as above.

ACKNOWLEDGMENT

Your Directors wish to place on record their sincere appreciation for the co-operation and support extended to the Company by the Government of India, the Gujarat State Government and by the relevant Government Authorities, Central, State and Local, the Company''s Bankers and the Business Associates.

Your Directors also thank all the employees at every level, who, through their dedication, co-operation and support, have enabled the Company to achieve sustained growth.

And to you, our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the Board of Directors

Place: Mumbai, Arun S. Sanghi

Date: 24th May, 2016. Chairman


Mar 31, 2015

Dear Members,

The Directors take pleasure in presenting the 25th Annual Report together with the Audited Statement of Accounts for the year ended 31 March, 2015.

FINANCIAL RESULTS AND ACCOUNTS:

The Financial Results are as under: (Rs. in Lacs)

Year ended Year ended 31 March, 2015 31 March, 2014

Gross Income 2,106.47 2,251.20

Profit Before Interest and Depreciation 414.86 592.25

Finance Charges 8.70 10.69

Gross Profit before Depreciation 406.16 581.36

Provision for Depreciation 103.98 94.96

Net Profit Before Tax 302.18 486.60

Provision for Tax 94.04 158.20

Net Profit After Tax 208.14 328.40

Balance of Profit brought forward 692.64 500.76

Depreciation on transition to Schedule II of the Companies Act, 2013 on tangible fixed assets with nil remaining useful life (6.23) -

Balance available for appropriation 894.55 829.16

Proposed Dividend on Equity Shares 88.62 88.62

Tax on proposed Dividend 18.15 15.06

Transfer to General Reserve 20.82 32.06

Surplus carried to Balance Sheet 7 66.96 692.64

OPERATIONS:

India's merchandise exports of US $ 310534 million recorded in the year under review are marginally lower than US $ 314416 million exports achieved in the previous year, registering a negative growth of 1.23%.

During the year, your Company experienced subdued demand from its major overseas clients, due to global slowdown. There was decline in the inflow of orders from European markets where your Company dispatches major quantity of its merchandise. Consequent to this, the actual dispatches in terms of pairs of socks were 12.48% lower compared to the previous year. The actual sales value of Rs. 1893 lac was posted this year by your Company. However, there is a reduction of only 6.60% compared to the previous year sales, due to better product-mix achieved during the year.

The export sales constituted 91.38% of the total sales value. Domestic sales this year were 58.06% higher compared to the previous year.

Your Company could improve its product-mix by initiating efforts to reach out to some niche markets which need exclusive products and offer higher realization. The average selling price during the year was Rs. 43.57 per pair of socks against Rs. 40.62 per pair of socks achieved in the previous year, recording a rise of 7.26%. The Company is focusing on improving its high margin business through innovation and change in processes.

Your Company continued to make relentless efforts to develop new markets and increase the share of sales to existing small clients in export markets. This helped improve its client-mix, and bring down the percentage share of business of concentrated customers with your Company; thereby reducing risk and vulnerability of your Company.

The actual profit before tax of Rs. 302.18 lac was 37.90% lower compared to Rs. 486.60 lac recorded in previous year. This significant drop in profits was the out come of many cumulative factors.

* Decelerating growth due to reduced inflow of export orders, compared to previous year.

* There was significant increase in cost inputs. Though the prices of dyed cotton yarn recorded nominal reduction in the last quarter of the year, the prices of other raw materials ie woolen yarn, nylon and elastane yarn showed no improvement.

There was unprecedented rise in minimum wages of operators during the year as declared by the Gujarat Government by Rs. 1359 per month per head amounting to 22.56% of total wages. With 45 to 50% fringe benefits, the impact on the wage bill of the Company was substantial. The power rate increased by 3.88% and natural gas rate increased by 8.82% compared to the previous year. Your Company had to absorb these cost escalations, as it is not possible to pass on the same to clients in the export business.

* Your Company launched and successfully test marketed its own brand of various types of high quality cotton "LORD WALKER" (LW) socks, in Pune, Maharashtra. Progressively, these socks are being introduced nation wide. Efforts are also underway to make LW socks available on line, with reputed e- commerce web portals.

During the financial year, your Company has spent about Rs. 70 lac towards the cost of Managerial and Marketing personnel, both in house and consultants and for Marketing, including advertising, expenses, for launching and promoting the LW brand of socks. Some of these expenses are one time and some will be recurring.

For a correct, like to like, performance comparison with the previous year, this amount of Rs. 70 lac, spent on the LW launch this year, should be added to the profit before tax of this year.

Your Company is confident that the contribution of LW socks will be substantial to the performance of the Company, in the coming years.

It has been the consistent policy of your Company to plough back a part of surplus profit every year to purchase new machines and other equipment to enhance production, improve product-mix and adhere to strict environmental and safety measures. This helps your Company maintain its competitiveness. During the year, Six coarse gauge double cylinder machines were purchased and installed. The socks produced on these machines are sold in niche markets, with high prices and improved margin. The total capital outlay was Rs. 60.79 lac.

Exports will continue to be the main thrust area of your Company, because export clients offer large size orders, which result in better plant efficiency, improvement in quality and better management of inventory. There is assured security in recovery of export receivables. However, it is expected that sales in the domestic market will play an increasingly important role, in the future.

The comparative performance highlights for last five years are as under:

Units 2014-15 2013-14

Total Income Rs in lac 2106.47 2251.20

Export Sale Rs in lac 1729.78 1923.53

Net Profit before Tax Rs in lac 302.18 486.60

Net Profit after Tax Rs in lac 208.14 328.40

Cash Profit Rs in lac 312.11 423.36

Knitting Production Pairs in lac 41.86 51.92

Pairs Dispatched Pairs in lac 43.45 49.64

Sales realization per pair Rs 43.57 40.83

Earning Per Share Rs 4.23 6.67



2012-13 2011-12 2010-11

Total Income 2120.54 1685.23 1503.39

Export Sale 1838.07 1449.10 1326.49

Net Profit before Tax 328.47 201.02 124.99

Net Profit after Tax 221.50 139.20 86.84

Cash Profit 306.18 218.76 164.11

Knitting Production 57.42 45.38 46.16

Pairs Dispatched 55.30 46.78 48.68

Sales realization per pair 35.36 32.81 29.14

Earning Per Share 4.50 2.83 1.76

Your Company continues to maintain its reputation of being one of the leading suppliers of premium quality dress and sports socks to many reputed retail chains in Europe and the Gulf Countries. As most of the customers are high end reputed retailers who need excellent quality socks, the Company has positioned itself to supply them quality products and timely deliveries. Therefore, the Company is optimistic of growth through continued expansion and innovation.

The current year 2015-16 has started with great optimism. The order book position has been very encouraging till July 2015 and this reflects the increasing affirmation of your Company's products, quality, timely deliveries, quick response and superb designing capability in export markets.

There is no change in the nature of business of your Company for the year under review.

Overview of the Economy:

The merchandise exports from India have remained stagnant between US $ 302 to US $ 314 billion in the last three financial years.

India's share is a mere 2% in Global trade, where as that of China is around 11.7% (2013). The Foreign Trade Policy 2015-2020 announced in April 2015 has set a target of 3.5% by 2020-21 for India.

In the last two/three years, the exporting units were big beneficiaries of Indian rupee depreciation. Since mid 2014, the rupee has been strengthening against Several Currencies, resulting in erosion of both realisation and profit for exporters. This is one cause for the deceleration in exports since mid 2014.

In Foreign Trade Policy 2015-2020 announced in April 2015, a new scheme named MEIS (Merchandise Exports From India Scheme) has been introduced where by the exporters will get incentive of 2% of FOB value in respect of merchandise falling under ITC (HS) code 61 - Knitted Apparels (including socks) exported to United Kingdom and United States of America etc (but not Switzerland and Gulf countries). This scheme is in substitution of earlier MLFP scheme (market linked focal product) which was off and on introduced and withdrawn.

The manufacturing activity has been decreasing. Corporate results were weak in third quarter of the year under review and the fourth quarter results are also not encouraging.

However the new initiatives taken and good ground work done to improve the economy will helpfully bear full fruit in the year to come.

Despite odds, the performance of your Company in the year under review is satisfactory when viewed in the backdrop of the expense incurred in launching the Lord Walker brand and an extremely challenging environment during the year.

During the year, the Company carried out sales in the following geographical segments: (In Rs.)

United Kingdom Switzerland UAE

Revenues 76,677,240 58,014,174 31,786,244

India Rest of the World Total

Revenues 16,328,233 6,500,135 189,306,026

Industry Structure and Development

The Indian textile industry, including hosiery and clothing, is one of the leading sectors of the Indian economy and contributes significantly to the country's industrial output (14%). It employs 35 million people in direct employment and earns much needed foreign currency with 17% of India's exports coming from Textiles and Garments. Overall, it contributes around 5% to India's GDP.

Textiles and apparel exported from India consume mainly indigenous inputs and are, therefore, big earners of net foreign exchange. This helps the country reduce its current account deficit.

Value of socks manufactured in India is estimated around Rs. 3000 crores per annum. Many major socks manufacturers in India are supplying their socks in the domestic market as licensees of international brands. Only a few supply under their own brand name.

Opportunities

Your Company is well poised to seize opportunities available in the sock knitting industry on account of its state-of-the-art production facilities, technical expertise, good quality culture and emphasis on product innovation and growth potential.

Your Company is meeting international quality norms of comfort, stretch, sizing, skin care and other parameters essential for inner wear intimate apparel. They also meet the fashion demands in terms of design, different knits and multiple shades. The socks manufactured by your Company are sold in Supermarket Chains and upper end Retail Stores.

The growing young middle-class population is a source of great potential and provides immense opportunities to spurt growth in the sock industry in the future.

For duty drawback on export shipments, "cap per unit" was raised upwards (more than double, say 2.25-2.50 times) with effect from 22.11.2014. This gave good financial benefit to exporters like Virat, who are exporting high price products. This has provided good opportunity to exporters to improve product-mix for high price markets.

Your Company is knitting super sophisticated design socks for a reputed international brand selling socks in big outlets at high prices. This gives great goodwill to your Company, as the name of your Company is mentioned on the band rolls of the socks of that brand.

All major overseas customers of your Company insist on social audits to be carried out in the factory at least once in two years, by the internationally acclaimed "Business Social Compliance Initiative Agencies". Such audits cover compensation to employees, health, safety, environment and management practices. New customers also insist on such audits to be conducted, before they start the business. The compliance of such audits to International Standards, brings healthy and ethical culture in working and creates goodwill of the Company among its clients. Your Company has successfully complied with many such audits and has thus ensured continuance of business with major clients for long periods.

Threats:

Your Company derives about 91% of its revenue from the export market. Economic slowdown or decline in demand in the country of buyer of your Company's products will have adverse impact on the working of the Company.

Your Company is potentially exposed to any changes in exchange rates, tariff, duty drawback rates, and also the Government Policies of the Countries which purchase your Company's product.

In the international market, countries like Turkey have developed an edge over the Indian manufacturers due to reduced freight cost and much reduced delivery time. Besides, Turkey enjoys exemption of 10.6% custom duty in relation with EU countries. This has posed a threat to the Indian socks suppliers and may pressurise them to reduce prices and thereby squeeze their margins. Even Bangladesh enjoys exemption in import duty by virtue of its being a less developed country and exports goods at prices which Indian socks suppliers cannot compete.

The major challenge that the textile, apparel and hosiery industry faces is of ever increasing production costs arising out of rising wages, power and other overheads.

Rupee has become strong against several foreign currencies from mid 2014. This has already adversely impacted the topline and bottom line of the exporting units, when compared with their last two/three years' performances.

FINANCE

As on the date of Balance Sheet the company is debt free in terms of long term loans.

WORKING CAPITAL LOAN

The Company is enjoying export packing credit and foreign bill purchase facilities.

INSURANCE

All the assets of the Company have been adequately insured.

DIVIDEND

The Board of Directors of the Company has recommended a dividend of Rs. 1.80 per share of Rs. 10/- each (18%). The total dividend will absorb Rs. 8,862,012 excluding Rs. 1,814,497 as tax on dividend. The dividend will be free of tax in the hands of the shareholders of the Company.

BOARD MEETINGS

Regular meetings of the Board of Directors are held to discuss and decide on various business policies, strategies and other business. Due to business exigencies, sometimes business decisions are taken by the Board through circulation.

The Board met six (6) times during the FY 2014-15, viz. on May 29, 2014, August 12, 2014, September 11, 2014, November 13, 2014, February 12, 2015 and March 05, 2015. Detailed information on the meeting of the Board is included in the report on Corporate Governance which forms part of this Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mrs. Ayesha K. DadyBurjor was appointed as a whole time Director of the Company in the Board of Directors' meeting held on 11.09.2014. Her remuneration was also approved by the Nomination and Remuneration Committee on the same date. Her appointment as a Whole-time Director has to be ratified by the shareholders in the Annual General Meeting to be held on 3rd September, 2015.

The term of Mr. Adi F. Madan as Managing Director of the Company is expiring on 30th September, 2015. The Board of Directors in its meeting held on 29th May, 2015 has re-appointed Mr. Adi F. Madan as Managing Director of the Company for the further term of 3 years from 1st October, 2015 to 30th September, 2018 on the same terms and conditions as regards his functions, duties and remuneration. The Remuneration Committee has also approved his remuneration. His candidature as non-retiring Director and the Special Resolution for approval of his remuneration will be put before the ensuing Annual General Meeting for your approval.

Mr. Adi F. Madan Managing Director and Mr. Asinkhan S. Baholu Company Secretary of your Company are the Key Managerial Personnel as per the provision of the Companies Act, 2013, and were already in office before the commencement of the Companies Act, 2013. Mr. Bhavik Maisuria Deputy Financial Manager was appointed as a Chief Financial Officer of your Company in the Board Meeting held on 29th May, 2014.

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Independent Directors have submitted the Declaration of Independence, as required pursuant to section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in sub-section (6).

COMPOSITION OF AUDIT COMMITEE

The Board has constituted an Audit Committee comprising of three Independent Directors. The Committee members meet regularly and make their recommendations in accordance with the terms of reference specified by the Board. Such recommendations are thoroughly discussed in Board meetings and by and large accepted for implementation.

The details of the meetings and the discussion held by the Committee are given in detail in the 'Report on Corporate Governance' of the Company which forms part of this Annual Report.

NOMINATION AND REMUNERATION COMMITTEE

The Board has constituted a Nomination and Remuneration Committee comprising of three Independent Directors. The Committee recommends appointment/re-appointment of executive directors and appointment of employees from the level of vice-president and above along with remuneration to be paid to them. The remuneration is fixed keeping in mind the person's track record, his/her potential, individual performance, the market trends and scales prevailing in the similar industry.

The details of the meetings and the discussion held by the Committee are given in details in the 'Report on Corporate Governance' of the Company which forms part of this Annual Report.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Board has constituted a Stake Holder Relationship Committee comprising of three Directors, two independent Directors and the Managing Director.

The Committee met regularly to approve share transfers, transmission, issue of duplicate share certificates, re- materialization of shares and all other issues pertaining to shares and also to redress investor grievances like non-receipt of dividend warrants, non-receipt of share certificates, etc. The committee regularly reviews the movement in shareholding and ownership structure. The committee also reviews the performance of the Registrar and Transfer Agents.

The details of the meetings and the discussion held by the Committee are given in detail in the 'Report on Corporate Governance' of the Company which forms part of this Annual Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The company has an established mechanism for Directors/Employees to report concerns about unethical behavior, actual or suspected fraud or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of directors/employees who avail of the mechanism. The company affirms that no personnel has been denied access to the audit committee. The company has formulated a Policy of Vigil Mechanism and has established a mechanism that any personnel may raise Reportable Matters within 60 days after becoming aware of the same. All suspected violations and Reportable Matters are reported to the Chairman of the Audit Committee. The key directions/actions are informed to the Managing Director of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

In pursuance of section 134 (5) of the Companies Act, 2013, the Directors hereby confirm that:

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

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

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis; and

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

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

SUBSIDIARIES

As the Company has no subsidiaries, Section 129(3) of the Companies Act, 2013, does not apply. During the previous year(2013-14), the Company had subscribed to 30% of the Partners' Capital in Armayesh Enterprise LLP.

EXTRACT OF ANNUAL RETURN

Pursuant to sub-section 3(a) of section 134 and sub-section (3) of section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extract of the Annual Return as at March 31,2015 forms part of this Report as Annexure I.

AUDITORS

As decided in the last Annual General Meeting held on 11.09.2014, M/s. Deloitte Haskins and Sells, Chartered Accountants, Baroda have been appointed as Statutory Auditors for financial years 2014-15, 2015-16 and 2016-17. The said appointment, on an annual basis, is being ratified in the ensuing Annual General Meeting.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

Mr. A. J. Gandhi practicing Company Secretary was appointed as a Secretarial Auditor under the provision of section 204 of the Companies Act, 2013 for the financial year 2014-15, during the Board Meeting held on 29th May 2014. The report of the secretarial auditor for the F.Y 2014-15 is annexed to this Report as Annexure - II.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOING

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is annexed and forms part of this Report as Annexure - III.

DETAILS RELATING TO DEPOSITS

The Company has not accepted any deposit during the year, nor any deposit has remained unpaid or unclaimed as at the end of the year.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

No significant and material orders were passed by the regulators or Courts or Tribunals during the year, adversely impacting the Company's operation in future.

INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY

A strong internal control culture is pervasive in your Company. Your Company has documented a robust and comprehensive internal control system for all the major processes to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals and compliance with policies, procedures, laws and regulations.

Your Company believes in formulating adequate and effective internal control systems and implementing the same to ensure that assets and interests of the Company are safeguarded and reliability of accounting data and accuracy are ensured with proper checks and balances. The Internal control system is improved and modified continuously to meet the changes in business conditions, statutory and accounting requirements. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control system and suggests improvements for strengthening them. The Company has a sound Management Information System which is an integral part of the control mechanism. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken.

In furtherance to the Company's philosophy of conducting business in an honest, transparent and ethical manner, your Company has laid down. "Virat Anti corruption and Anti bribery policy". As a Company we take a zero tolerance approach to bribery and corruption.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Your Company has not -

* given any loan to any person or other body corporate.

* given any guarantee and provided any security in connection with a loan to any other body corporate or any person.

* acquired by way of subscription, purchase or otherwise the securities of any other body corporate otherwise than in accordance with the law.

RISK

Risk Management:

A documented risk management policy is in place as per clause 49 (VI) of the listing agreement.

Your Company is exposed to risk from fluctuation of foreign exchange rates, prices of raw materials and finished goods, compliances risk and people risk.

Foreign Exchange Risk:

Your Company manages its foreign exchange risk within the framework laid down by Company's policy, approved by the Board, keeping in mind the size of the Company.

Commodity Prices Risk:

Your Company proactively manages the risk of purchasing raw materials through forward booking, vendor development practices and inventory management. The Company's strong reputation for quality and services with overseas clients mitigates the impact of price risk on finished goods.

Compliance Risk:

Your company has to follow various statutes and regulations including the Companies Act. The company is mitigating these risks through regular review of legal compliances carried out through internal as well as external compliance audits.

People Risk:

Your Company nurtures and grooms the talented and key personnel for future business leadership and looks after them judiciously such that they stay with the Company.

CORPORATE SOCIAL RESPONSIBILITY

Section 135(1) of the Companies Act 2013, is not applicable to your Company, because the net worth, turnover and net profit of your Company during the year is less than the required limits.

RELATED PARTY TRANSACTIONS

All related party transaction that were entered during the financial year were in the ordinary course of the business of your Company and were on arm's length basis. There were no materially significant related party transactions entered by your Company with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of your Company. The details are given in Annexure - IV, forming part of this report.

FORMAL ANNUAL EVALUATION

During the year, the Board adopted a formal mechanism for evaluating its performance and as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Board functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of individual Directors including the Board Chairman who were evaluated on parameters such as attendance, contribution at the meetings and otherwise, independent judgment, safeguarding of minority shareholders interest etc.

MEETING OF INDEPENDENT DIRECTORS

All the four independent Directors of the Company held a meeting on 12th February 2015, and reviewed the performance of non-independent Directors and the Board as a whole. They also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board.

They expressed their satisfaction at the performance of non-independent Directors and appreciated the flow of information from the Company management.

COST AUDITORS

The Companies (Cost Records and Audit) Rules, 2014 does not require textile industry to have cost audit records. Moreover, in terms of Rule 7, where the revenue of a company from exports, in foreign exchange, exceeds seventy five percent of its total revenue, the said company is also exempted from maintaining cost audit records. The above rules were notified on 30.06.2014. In view of the above, the Company is exempted from maintaining Cost Audit records and appointment of Cost Auditor for the financial year 2014-15.

RATIO OF REMUNERATION TO EACH DIRECTOR

The ratio of the remuneration of each director to the median employee's remuneration and other details in terms of sub-section 12 of section 197 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this Report as Annexure V of this report.

LISTING FEES

Your Company has paid listing fees up to 31st March 2016 to the Bombay Stock Exchange in April, 2015. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION

Your Company shall not be mandatorily required to submit Corporate Governance Report as per amendments to Clause 49 of the Equity Listing Agreement of the Securities and Exchange Board of India (SEBI) Circular No.: CIR/CFD/POLICY CELL/7/2014 dated 15th September, 2014; the applicability of Corporate Governance in listed entities is as under:

Applicability of Clause 49:

The Clause 49 of the Listing Agreement shall be applicable to all companies whose equity shares are listed on a recognized stock exchange. However, compliance with the provisions of Clause 49 shall not be mandatory, for the time being, in respect of the following class of companies:

a) Companies having paid up equity share capital not exceeding Rs. 10 crore and Net Worth not exceeding Rs. 25 crore, as on the last day of the previous financial year; Provided that where the provisions of Clause 49 becomes applicable to a company at a later date, such company shall comply with the requirements of Clause 49 within six months from the date on which the provisions became applicable to the company.

b) Companies whose equity share capital is listed exclusively on the SME and SME-ITP Platforms.

ANTI SEXUAL HARASSMENT POLICY

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

The following is a summary of Sexual Harassment complaints received and disposed of during the year 2014-15:

No. of complaints received: Nil

No. of complaints disposed of: Not applicable

PARTICULARS OF EMPLOYEES

As per provision of Section 197 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, particulars of the employees are required to be annexed in respect of the employees of the Company who were in receipt of total remuneration of Rs. 60.00 Lac per annum or Rs. 5.00 Lac per month. During the financial year, under review, there is no employee drawing remuneration as above.

CORPORATE GOVERNANCE AND MANAGEMANT DISCUSSION AND ANALYSIS

Detailed notes on the Corporate Governance and the Management Discussion and Analysis Report and other such disclosures as are required to be made under the Listing Agreement with the Stock Exchanges, are separately annexed and form part of this Report.

COMPLIANCE CERTIFICATE

The Certificate from the Auditors of the Company regarding compliance of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is not issued since Corporate Governance is not applicable to the company this year.

ACKNOWLEDGMENT

Your Directors wish to place on record their sincere appreciation for the co-operation and support extended to the Company by the Government of India, the Gujarat State Government and by the relevant Government Authorities, Central, State and Local, the Company's Bankers and Business Associates.

Your Directors also thank all the employees at every level, who, through their dedication, co-operation and support, have enabled the Company to achieve sustained growth.

For and on behalf of the Board of Directors

Place: Mumbai, Arun S. Sanghi Date : 29th May, 2015. Chairman


Mar 31, 2014

Dear Members,

The Directors take pleasure in presenting the 24th Annual Report together with the Audited Statement of Accounts for the year ended 31st March, 2014.

FINANCIAL RESULTS AND ACCOUNTS:

The Financial Results are as under: (Rs. in Lacs) Year ended Year ended 31 March, 2014 31 March, 2013

Gross Income (including other income) 2251.20 2120.54

Gross Profit (Before Interest, Depreciation and Tax) 592.25 423.56

Less: Interest (Net) 10.69 10.42

Depreciation 94.96 84.68

Provision for tax :

- Current Tax 153.00 122.00

- Deferred Tax 5.20 (14.46)

- MAT Credit written off - 2.63

- Short/(Excess) provision for tax relating to prior years - (3.21)

Net Profit / (Loss) After Taxes 328.40 221.50

Balance [ /(-)] carried from previous year''s Account 500.76 376.73

Profit/(Loss) available for Appropriations: 829.16 598.23

Proposed Dividend 88.62 73.85

Dividend Distribution Tax 15.06 12.55

Transfer to General Reserve 32.84 11.07

Balance [ /(-)] carried to next year''s Account 692.64 500.76

OPERATIONS:

The year under review was a very satisfying and a successful year. The Company posted sales of Rs. 20.27 crores, the highest achieved since its inception; registering top line growth of 3.71% over previous year. The export sales constituted 94.90% of total sales, recording growth of 4.65% over the preceding year. This performance is the outcome of the reputation that your Company continues to enjoy among its overseas customers because of the globally acclaimed quality of its products, product innovation, timely deliveries, prompt communication and quick response in developing samples.

The profit before tax of Rs. 486.60 lac during the year was 48.14% higher compared to Rs. 328.47 lac recorded in the previous year. This is a land mark improvement in profit after absorbing the input cost escalations, is due to favourable exchange rates caused by weakening of Rs. (rupee) against US Dollar (USD) and Great Britain Pound (GBP); and improved product mix achieved by your Company by initiating efforts to reach out to some niche markets, who need exclusive products and offer higher realisation and higher profit margin per pair of socks. The average selling price for export sales during the year was Rs. 42.18 per pair of socks against Rs.36.03 per pair of socks achieved in the previous year - a rise of 17.07%. The Company is focusing on improving high margin business by debottlenecking the constraints in manufacturing process.

Prices of dyed cotton yarn which constitute 25% of cost of production of your Company remained highly volatile during the year. Besides, there was rise in the prices of other raw materials, and increase in the cost of employees'' remuneration, power, fuel and overheads.

It has been the consistent policy of your Company to plough back a substantial part of surplus profits every year to purchase new machines and equipment to enhance the production base and also to replace some old machines which had become cost ineffective. This helps your Company to maintain its competitiveness and achieve better quality. During the year, Twenty (20) sock knitting machines were installed and Six (6) existing machines were replaced. Total capital outlay was Rs. 141.84 lac.

The comparative performance highlights for last five years are as under:

Units 2013-14 2012-13 2011-12

Total Income in lac 2251.20 2120.54 1685.23

Export Sale in lac 1923.53 1838.07 1449.10

Net Profit before Tax in lac 486.60 328.47 201.02

Net Profit after Tax in lac 328.40 221.50 139.20

Cash Profit in lac 423.36 306.18 218.76

Knitting Production Pairs in lac 51.92 57.42 45.38

Pairs Dispatched Pairs in lac 49.64 55.30 46.78

Sales realization per pair Rs 40.83 35.36 32.81

Earning Per Share Rs 6.67 4.50 2.83



2010-11 2009-10

Total Income 1503.39 1471.43

Export Sale 1326.49 1178.53

Net Profit before Tax 124.99 216.21

Net Profit after Tax 86.84 146.03

Cash Profit 164.11 217.00

Knitting Production 46.16 42.80

Pairs Dispatched 48.68 37.77

Sales realization per pair 29.14 33.05

Earning Per Share 1.76 2.97

Your Company continues its relentless effort to develop new markets and acquiring new clients to overcome turbulent business environment in overseas market and also maintain the pace of its growth.

Your Company continues to maintain its reputation of being one of the leading suppliers of premium quality dress and sports socks to many reputed retail chains in Europe and the Gulf Countries. As most of the customers are high end reputed retailers who need excellent quality socks, the Company has positioned itself to supply them quality products and timely deliveries. Therefore, the Company is optimistic of growth through continued expansion and innovation.

DIVIDEND:

The Board of Directors of the Company has recommended a dividend of Rs. 1.80 per share of Rs.10/- each (18 %). The total dividend will absorb Rs. 8,862,012, excluding Rs. 1,506,099 as tax on dividend. The dividend will be free of tax in the hands of the share holders of the Company.

FINANCE:

As on the date of Balance Sheet the company is debt free in terms of long term loans.

WORKING CAPITAL LOAN

The Company is enjoying export packing credit and foreign bill purchase facilities.

INSURANCE

All the assets of the Company have been adequately insured.

SUBSIDIARIES

As the Company has no subsidiaries, Section 212 of the Companies Act, 1956, does not apply. During the year, the Company has subscribed to 30% of the Partners'' Capital in Armayesh Enterprise LLP.

DIRECTORS

Mr. Arun S. Sanghi, Mr. Ajit P. Walwaikar and Mr. Harish H. Shah, all the three Independent Directors of the Company will hold the office as Directors of the Company for a term of five consecutive years from the date of the Annual General Meeting and for this, Ordinary Resolutions will be passed.

Mr. Armand N. Aga is retiring by rotation and being eligible has offered himself for re-appointment.

Mr. Vinay Sanghi was appointed as an Additional Director of the Company on 29.05.2014 till the date of the Annual General Meeting. He will be appointed as an Independent Director of the Company and will hold the office for a term of five consecutive years from the date of ensuing Annual General Meeting and for this an Ordinary Resolution will be passed.

COMMISSION

The Board of Directors of the Company proposed that the five non Whole-time Directors of the Company shall receive commission at the rate of 1% of net profit of the Company computed in the manner laid down in Section 197 and 198 of the Companies Act, 2013. The total amount of commission works out to Rs. 4.92 lac. This shall be paid subject to and within the limit approved by the members of the Company at the ensuing Annual General Meeting.

DIRECTORS'' RESPONSIBILITY STATEMENT

In terms of Section 217 (2AA) of the Companies Act, 1956 regarding inclusion of Directors'' Responsibility Statement, it is stated: i that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit / loss of the Company for the year under review; iii that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv that the Directors have prepared the accounts for the financial year ended 31st March, 2014 on going concern basis.

AUDITORS

The term of office of M/s. Deloitte Haskins and Sells, Chartered Accountants, Baroda as Auditors expires at the conclusion of the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment for the financial years 2014-15, 2015-16 and 2016-17. Members are requested to re-appoint the Auditors and fix their remuneration.

COST AUDITORS

As per the requirement of the Central Government, and pursuant to the provision of Section 233B of the Companies Act 1956, the audit of the cost accounts relating to the manufacturing of "Knitted Socks" falling under chapter 61 of the Central Excise Tariff Act 1985 is required to be carried out every year. The Company has appointed practicing Cost Accountants M/s Manubhai & Associates, Surat for the financial year 2013-14, ended 31st March 2014. Approval from the Central Government has been received for above referred appointment. The Cost Audit Report in respect of financial year 2013-14 will be filed on or before 27th September 2014 i.e. 180 days from the closing of the financial year of the Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOING

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and forms part of this Report.

PARTICULARS OF EMPLOYEES

As per provision of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, particulars of the employees are required to be annexed in respect of the employees of the Company who were in receipt of total remuneration ofRs. 60.00 lac per annum or Rs. 5.00 lac per month. During the financial year, under review, there is no employee drawing remuneration as above.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

Detailed notes on the Corporate Governance and the Management Discussion and Analysis report and other such disclosures as are required to be made under the Listing Agreement with the Stock Exchanges, are separately annexed and form part of this Report.

COMPLIANCE CERTIFICATE

The Certificate from the Auditors of the Company regarding compliance of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this Report.

ACKNOWLEDGMENT

Your Directors wish to place on record their sincere appreciation for the co-operation and support extended to the Company by the Government of India, the Gujarat State Government and by the relevant Government Authorities, Central, State and Local, the Company''s Bankers and the Business Associates. Your Directors also thank all the employees at every level, who, through their dedication, co-operation and support, have enabled the Company to achieve a sustained growth.

For and on behalf of the Board of Directors

Place: Mumbai, Arun S. Sanghi Date : 29th May, 2014. Chairman


Mar 31, 2012

The Directors take pleasure in submitting the 22nd Annual Report together with the Audited Statement of Accounts for the year ended 31st March, 2012.

FINANCIAL RESULTS AND ACCOUNTS:

The Financial Results are as under: (Rs.in Lacs)

Year ended Year ended March 31,2012 March 31, 2011

Gross Income (including other income) 1,685.23 1,543.90

Gross Profit (Before Finance Cost, Depreciation & Tax) 290.08 209.92

Less: Finance Cost 9.49 7.66

Depreciation. 79.57 77.26

Provision for Tax :

Current Tax 81.98 54.00

Deferred Tax (17.53) (16.82)

MAT Credit Entitlement (2.63) 0.98

Net Profit/ (Loss) After Taxes 139.20 86.84

Balance [ /(-)] carried from previous year's Account 309.68 268.62

Profit/(Loss) available for Appropriations: 448.88 355.46

Dividend; 59.08 39.39

Dividend Distribution Tax 9.58 6.39

Transfer to General Reserve 3.48 -

Balance [ /(-)] carried to next year's Account 376.73 309.68

OPERATIONS:

During the year under review, your Company achieved 8.22% higher sales turnover compared to last year. This reflected the increasing trust and confidence reposed by the customers in your Company's products, quality, good communication and timely deliveries. The average sales realization per pair during the year under review increased to Rs. 32.81 against Rs. 29.14 in previous year - a rise of 13%.

The net profit after tax of your Company posted commendable performance during the year under review, registering 60.3% increase against last year. The factors contributing to improved profitability were - favorable exchange rates caused by steep weakening of Rs. (Rupee) against U.S. Dollar (USD) and Great Britain Pound (GBP) particularly in the last six months of the year; better product mix and price rise implemented in the year.

In line with the long term strategy of your Company to make judicious investment in purchasing knitting machines, thereby making optimum use of balancing equipment and infrastructural facilities, six new knitting machines were ordered in the year 2011-12 and were received and installed in April, 2012. The addition of machines, besides enlarging the production base of your Company, helped cater to accelerated flow of export orders year after year and widen the product-mix range.

The encouraging trend of export order inflow continues during the current year also. Your Company continues to maintain its reputation of being one of the leading suppliers of premium quality dress and sports socks to many reputed retail chains in Europe and the Gulf Countries As most of the customers are high end reputed retailers who need excellent quality socks, the Company is in a position to supply them quality products and timely deliveries.

DIVIDEND:

The Board of Directors of the Company have recommended a dividend of Rs. 1.20 per share of Rs. 10/- each (12%). The total dividend will absorb Rs. 59,08,008, excluding Rs. 9,58,427 as tax on dividend.

FINANCE:

The Company has been regular in payment of interest as well as installments as per the schedule to the Banks, from its internal accruals.

WORKING CAPITAL LOAN

The Company is enjoying export packing credit and foreign bill purchase facilities.

INSURANCE

All the assets of the Company have been adequately insured.

SUBSIDIARIES

As the Company has no subsidiaries, Section 212 of the Companies Act, 1956, does not apply.

DIRECTORS

Mr. Naozer J. Aga resigned as the Chairman and also as Director of the Company with effect from 01.04.2012.

The Board of Directors places on record their appreciation of the meritorious contribution and financial support made by Mr. Naozer J. Aga during his Chairmanship of the Company. It was under his leadership and guidance that the loss making Company turned the corner and has achieved noteworthy financial stability The Board of Directors appointed Mr. Naozer J. Aga as the Chairman Emeritus and Senior advisor of the Company w.e.f. 01.04.2012 considering his experience and ability, and also to avail of his business acumen and entrepreneurial experience as a guiding force in the future.

The Board of Directors appointed Mr. Arun S. Sanghi as the Chairman of the Company in place of Mr. Naozer J. Aga w.e.f. 01.04.2012. The Board of Directors appreciated the long association and valuable contribution of Mr. Arun S. Sanghi as the Director of the Company.

In the Casual vacancy caused by Mr. Naozer J. Aga's resignation, Mrs. Ayesha K. DadyBurjor has been appointed as Director. Mrs. Ayesha K. DadyBurjor shall be director of the company till Mr. Naozer J. Aga would have retired by rotation as a Director.

Mr. Arun S. Sanghi and Mr. Ajit P. Walwaikar are retiring by rotation and being eligible have offered themselves for re-appointment.

The term of Mr. Adi F. Madan as Managing Director of the Company is expiring on 30th September, 2012. The Board of Directors in its meeting held on 30th May, 2012 have re-appointed Mr. Adi F. Madan as Managing Director of the Company for the term of further 3 years from 1st October, 2012to 30th September, 2015on the earlier terms and conditions only as its functions, duties and remuneration. The Remuneration Committee have also approved his remuneration His candidature as non-retiring director and Special Resolution for approval of his remuneration is being put before the ensuring Annual General Meeting for your approval.

DIRECTORS' RESPONSIBILITY STATEMENT

In terms of Section 217 (2AA) of the Companies Act, 1956 regarding inclusion of Directors' Responsibility Statement, it is stated:

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

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

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records

(iv) that the Directors have prepared the accounts for the financial year ended 31st March, 2012 on going concern basis.

AUDITORS

The term of office of M/s. Deloitte Haskins and Sells, Chartered Accountants, Vadodara as Auditors expires at the conclusion of the ensuing Annual General Meeting and being eligible have offered themselves for re- appointment. Members are requested to re-appoint the Auditors and fix their remuneration.

COST AUDITORS

Your Company has to maintain cost records for the year ended on 31st March, 2012 and Compliance Report of the same from the practicing Cost Accountant has to be sent to the Central Government within 180 days from the end of the financial year The practicing Cost Accountant has been appointed.

Subsequently under order - F. No. 52/26/CAB-2010 from Ministry of Corporate Affairs dated 24th January, 2012, it is informed that the Company manufacturing socks under chapter 61 of the Central Excise Tariff Act, 1985 will come under cost audit in respect of each of its financial year commencing on or after the 1st day of April, 2012. The practicing Cost Accountant appointed by us will do the cost audit also.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOING

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and forms part of this Report.

PARTICULARS OF EMPLOYEES

As per provision of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, particulars of the employees are required to be annexed in respect of the employees of the Company who .were in receipt of total remuneration of 60.00 Lac per annum or Rs. 5.00 Lac per month during the financial year, under review. There is no employee drawing remuneration as above.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

Detailed notes on the Corporate Governance and the Management Discussion and Analysis report and other such disclosures as are required to be made under the Listing Agreement with the Stock Exchanges, are separately annexed and form part of this report.

COMPLIANCE CERTIFICATE

The Certificate from the Auditors of the Company regarding compliance of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report.

ACKNOWLEDGMENT

Your Directors wish to place on record their sincere appreciation for the co-operation and support extended to the Company by the Government of India, Gujarat State Government and by the relevant Government Authorities, Central, State and Local, Company's Bankers and Business Associates.

Your Directors also thank all the employees at every level, who, through their dedication, co-operation and support, have enabled the Company to achieve a sustained growth.

For and on behalf of the Board of Directors

Place: Mumbai, Arun S. Sanghi

Date : 30th May, 2012. Chairman


Mar 31, 2011

The Directors take pleasure in submitting the 21st Annual Report together with the Audited Statement of Accounts for the year ended 31st March, 2011.

FINANCIAL RESULTS AND ACCOUNTS:

The Financial Results are as under: (Rs.in Lacs)

Year ended Year ended March 31,2011 March 31, 2010

Gross Income (including other Income) 1,503.39 1,471.43

Gross Profit (before Interest, Depreciation & Tax) 209.15 302.92

Less: Interest (Net) 6.89 15.74

Depreciation 77.26 70.97

Provision for Tax :

Current Tax 54.00 62.50

Deferred Tax (16.82) 14.87

MAT Credit Entitlement 0.98

Excess Provision of Tax (Net) of earlier years (7.19)

Net Profit / (Loss) After Taxes 86.84 146.03

Balance [ /(-)] carried from previous year's Account 268.62 168.67

Profit(Loss) available for Appropriations: 355.46 314.70

Dividend 39.39 39.39

Dividend Distribution Tax 6.39 6.69

Balance [ /(-)] carried to next year's Account 309.68 268.62

OPERATIONS:

The impact of the global financial crisis which hit world wide markets in 2008 continued in 2009 and 2010 also. Notwithstanding that, during the year under review, your company secured export orders at encouraging pace with the result that the order book position remained comfortable throughout the year. This reflected the increasing appreciation and affirmation by the customers of your Company's products, quality, good communication and timely deliveries. Consequent to this, in terms of pairs of socks, the knitting production was 8% higher and dispatches were 29% higher, compared to last year. However, the prices were under great pressure due to aggressive competition from Chinese and Turkish suppliers.

It has been the long term strategy of your Company to make judicious investments in purchasing knitting machines, thereby making optimum use of the present balancing equipments and infrastructural facilities. Six new knitting machines were added in the year 2009-10 and six more machines were also added in the year 2010-11, The last installed six machines have the facilities to manufacture children socks also, besides men's and ladies socks. The addition of machines besides enlarging the production base of your Company helped to cater to accelerated flow of export orders year after year and widen the product-mix range.

Despite higher production and higher dispatches, the profit after tax lagged behind last year by Rs.59.19 lac. The reasons for the substantial drop in profit is the cumulative impact of many adverse factors compared to the previous year like :- unprecedented rise in the prices of dyed cotton yarn by 100%, reduction in the rates of duty drawback by 15% w.e.f. 20th September 2010; appreciation of the rupee against the Great Britain Pound (GBP) and the U.S. Dollar (USD) resulting in lower rupee realisation of Rs.51.11 lacs during the year, both in turnover and profits, and also increase of 11% in the prices of fuel (HSD) and 13% in minimum wages in Gujarat.

The impact of adverse factors mentioned above more than offset the benefit of economies of scale.

The encouraging trend of export order inflow continues during the current year also. Your Company continues to maintain its reputation of being one of the leading suppliers of premium quality dress and sports socks to many reputed retail chains in Europe and the Gulf Countries. As most of the customers are high end reputed retailers who need excellent quality socks, the Company is in a position to supply them quality products and timely deliveries.

However, the possible increase in prices of cost inputs and rupee appreciation may have an adverse impact on the profitability of your Company in the current year, as well.

DIVIDEND:

The Board of Directors of the Company have recommended a dividend of Rs.0.80 per share of Rs. 10/- (8%). The total dividend will absorb Rs. 39,38,672/- excluding Rs. 6,38,951/- as tax on dividend.

FINANCE:

The Company has been regular in payment of interest as well as installments as per schedule to Banks, from its internal accruals.

WORKING CAPITAL LOAN

The Company is enjoying export packing credit and foreign bill purchase facilities.

INSURANCE

All the assets of the Company have been adequately insured.

SUBSIDIARIES

As the Company has no subsidiaries, Section 212 of the Companies Act, 1956, does not apply.

DIRECTORS

In accordance with the Provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. A. P. Walwaikar retires by rotation and being eligible, offers himself for re-appointment. Mr, Armand N. Aga was appointed as an Additional Director in the Board Meeting held on 9th September 2010 who holds office till the commencement of the ensuing AGM. A letter has been received from a shareholder of your Company signifying his intention to appoint Mr. Armand N. Aga as a Director, subject to retirement by rotation. His candidature is being put before the ensuing AGM for his appointment as Rotational Director.

Mr. Harish H. Shah was appointed as Director of the Company in the casual vacancy caused by the resignation of Mr. Madhav G. Kulkarni pursuant to Section 262 of the Companies Act, 1956 and Mr. Harish H. Shah was to hold the office of Director till the date Mr. M. G. Kulkarni would have held it Mr. M. G. Kulkarni was to retire on commencement of the ensuing AGM. A letter has been received from a shareholder of your Company signifying his intention for continuation of Directorship of Mr. Harish H. Shah. His candidature is being put before the ensuing AGM for being appointed as rotational Director.

DIRECTORS' RESPONSIBILITY STATEMENT

In terms of Section 217 (2AA) of the Companies Act, 1956 regarding inclusion of Directors' Responsibility Statement, it is stated: (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit/ loss of the Company for the year under review; (iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) that the Directors have prepared the accounts for the financial year ended 31st March, 2011 on going

concern basis.

AUDITORS

The term of office of M/s. Deloitte Haskins and Sells, Chartered Accountants, Baroda, as Auditors expires at the conclusion of the ensuing Annual General Meeting. The Board of Directors wishes to re-appoint them as Auditors of 'the Company and has received a certificate from them that their appointment, if made, would be within the prescribed limits, under Section 224 (1B) of the Companies Act, 1956. You are requested to appoint them as Auditors from the conclusion of the ensuing Annual General Meeting to the subsequent Annual General Meeting.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOING

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and forms part of this Report.

PARTICULARS OF EMPLOYEES

As per provision of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, particulars of the employees are required to be annexed in respect of the employees of the Company who were in receipt of total remuneration of Rs.60.00 Lac per annum or Rs.5.00 Lac per month during the financial year, under review. There is no employee drawing remuneration as above.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

Detailed notes on the Corporate Governance and the Management Discussion and Analysis report and other such disclosures as are required to be made under the Listing Agreement with the Stock Exchanges, are separately annexed and form part of this report.

COMPLIANCE CERTIFICATE

The Certificate from the Auditors of the Company regarding compliance of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report.

ACKNOWLEDGMENT

Your Directors wish to place on record their sincere appreciation for the co-operation and support extended to the Company by the Government of India, Gujarat State Government and by the relevant Government Authorities, Central, State and Local, Company's Bankers and Business Associates.

Your Directors also thank all the employees at every level, who, through their dedication, co-operation and support, have enabled the Company to achieve a sustained growth.

For and on behalf of the Board of Directors

Place: Mumbai, Naozer J. Aga

Date : 26th May, 2011. Chairman


Mar 31, 2010

The Directors take pleasure in submitting the 20th Annual Report together with the Audited Statement of Accounts for the year ended 31st March, 2010.

FINANCIAL RESULTS AND ACCOUNTS:

The Financial Results are as under: (Rs. in Lacs)

Year ended Year ended

March 31, 2010 March 31, 2009

Gross Income (including other Income) 1,471.43 1,401.61

Gross Profit (Before Interest, Depreciation & Tax) 302.92 337.04

Less: Interest (Net) 15.74 26.03

Depreciation 70.97 67.57

Provision for Tax:

Current Tax 62.50 27.50

Deferred Tax 14.87 75.11

Fringe Benefit Tax - 1.75

MAT Credit Entitlement - (43.96)

Excess Provision of Tax (Net) of earlier years (7.19) -

Net Profit / (Loss) After Taxes 146.03 183.04

Balance [+/(-)] carried from previous years Account 168.67 14.43

Profit/(Loss) available for Appropriations: 314.70 197.47

Proposed / Interim Dividend 39.39 24.62

Dividend Distribution Tax 6.69 4.18

Balance [+/(-)] carried to next years Account 268.62 168.67



OPERATIONS:

During the year under review, your Company continued to receive export orders at an encouraging pace, with the result that the order book position remained comfortable throughout the year. This reflected the ever increasing affirmation by the customers, of your Companys products, good communication and timely deliveries. Due to this the knitting production in terms of pairs of socks was 11% higher compared to last year. However, the prices were under great pressure.

Your Company has well established itself as the manufacturer exporters of premium quality of dress, sport and football socks for men, ladies and children. During the year under review, 94% of total revenues were obtained from export sales.

During the year, your Company installed six new single cylinder machines capable of knitting dress socks with design (motifs). There is permanent demand for such socks in export market. These machines were commissioned in March, 2010, and their full benefit will accrue in the next year.

The profit before taxes lagged behind last year by Rs. 27.23 lacs, despite higher production. The reason for this drop in profits is the unprecedented rise in the prices of main cost inputs, like 25 to 30% increase in dyed cotton yam prices, increase of 30.50% in minimum wages in Gujarat between February, 2009 and March, 2010 and increase of 6% in excise duty on nylon yam, elastane yam and indigenous store/spares.

Besides, due to rupee appreciation against both Great Britain Pounds (GBP) and U.S. Dollars (USD), particularly in the last quarter of the year, your Company lost Rs. 27.49 lacs both in turnover and profit due to reduced rupee realisation in this year compared to last year.

This impact of cost escalation in inputs and adverse exchange rates more than offset the benefit of economies of scale. The performance highlights for the year 2009 -10 compared to 2008 - 09 are as under:

Units 2009-10 2008-09 % Change

Total Income Rs.in lac 1,471.43 1,401.61 5

Export Sale Rs.in lac 1,178.53 1,274.19 (7)

Net Profit Rs.in lac 146.03 183.04 (20)

Cash Profit Rs.in lac 217.00 250.61 (13)

Knitting Production Pairs in lac 42.35 38.08 11

Pairs Despatched Pairs in lac 37.77 39.07 (3)

Earning Per Share Rs. 2.97 3.72 (20)



The encouraging trend of export order inflow continues during the current year also. Your Company continues to maintain its reputation of being one of the leading suppliers of premium quality dress and sports socks to many reputed retail chains in Europe and the Gulf Countries. As most of the customers are high end reputed retailers who need excellent quality socks, the Company is in a position to get better prices due to quality products and timely deliveries.

However, the increase in prices of cost inputs and rupee appreciation are likely to have adverse impact on the profitability of your Company in the current year, as well.

DIVIDEND:

The Board of Directors of the Company have recommended a dividend of Re. 0.80 per share of Rs. 10/- (8%). The total dividend will absorb Rs. 3,938,672/-, excluding Rs. 669,377/- as tax on dividend.

FINANCE:

The Company has been regular in payment of interest as well as instalments as per schedule to Banks and on inter corporate deposits, from its internal accruals.

WORKING CAPITAL LOAN

The Company is enjoying export packing credit and foreign bill purchase facilities.

INSURANCE

All the assets of the Company have been adequately insured.

SUBSIDIARIES

As the Company has no subsidiaries, Section 212 of the Companies Act, 1956, does not apply.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the company, Mr. Naozer J. Aga, retires by rotation and being eligible, offers himself for re-appointment.

Mr. Madhav G. Kulkarni resigned from the Directorship of the Board of Directors of the Company w.e.f. 03.11.2009. The Board places on record their appreciation of the contribution made by Mr. Madhav G. Kulkarni during his tenure of Directorship of the Company.

Mr. Harish H. Shah was appointed as Director of the Company in the casual vacancy caused by the resignation of Mr. Madhav G. Kulkarni pursuant to Section 262 of the Companies Act, 1956 and Mr. Harish Shah is to hold the office till the date Mr. Madhav G. Kulkarni would have held it.

Mr. Armand N. Aga ceases to be alternate Director on the return of Mr. Kaizad R. Dady Burjor.

Mr. Kaizad R. DadyBurjor resigned from the Directorship of the Board of Directors of the Company. The Board places

on record their appreciation of the contribution made by Mr. Kaizad R. Dady Burjor.

Mr. Armand N. Aga was appointed as additional Director of the Company. His candidature is being put before the ensuing AGM for appointed as a rotational Director.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 217 (2AA) of the Companies Act, 1956 regarding inclusion of Directors Responsibility Statement, it is stated:

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

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

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

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

AUDITORS

The term of office of M/s. Deloitte Haskins and Sells, Chartered Accountants, Mumbai as Auditors expires at the conclusion of the ensuing Annual General Meeting. M/s. Deloitte Haskins and Sells, Chartered Accountants, Mumbai, informed that they are not seeking reappointment at the ensuing Annual General Meeting. The Board of Directors wishes to appoint M/s. Deloitte Haskins and Sells, Chartered Accountants, Baroda as Auditors of the Company in place of previous Auditors and has received a Certificate from them that their appointment, if made, would be within the prescribed limits, under Section 224 (1B) of the Companies Act, 1956. You are requested to appoint them as Auditors from the conclusion of ensuing Annual General Meeting to the subsequent Annual General Meeting.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOING

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed in terms of Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and forms part of this Report.

PARTICULARS OF EMPLOYEES

As per provision of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, particulars of the employees are required to be annexed in respect of the employees of the Company who were in receipt of total remuneration of Rs.24.00 Lac per annum or Rs.2.00 Lac per month during the financial year, under review. There is no employee drawing remuneration as above.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

Detailed notes on the Corporate Governance and the Management Discussion and Analysis report and other such disclosures as are required to be made under the Listing Agreement with the Stock Exchanges, are separately annexed and form part of this report.

COMPLIANCE CERTIFICATE

The Certificate from the Auditors of the Company regarding compliance of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report.

CERTIFICATE OF RECOGNITION

The Office of the Zonal Joint Director General of Foreign Trade accorded your Company status of "Export House" for a period of five years with effect from 01.04.2009. Status holders are entitled to incentive scrip @ 1% of FOB value of exports made during the year 2009 -10 and 2010 -11.

ACKNOWLEDGMENT

Your Directors wish to place on record their sincere appreciation for the co-operation and support extended to the Company by the Government of India, Gujarat State Government and by the other concerned Government Authorities, Central, State and Local, Companys Bankers and Business Associates.

Your Directors also thank all the employees at every level, who, through their dedication, co-operation and support, have enabled the Company to achieve a sustained growth.

For and on behalf of the Board of Directors

Place : Mumbai, Naozer J. Aga

Date : 28th May, 2010. Chairman

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