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Directors Report of Virat Industries Ltd.

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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