Directors Report of Suryavanshi Spinning Mills Ltd.

Mar 31, 2015

Dear Members,

We have pleasure in presenting the 36th Annual Report on the business and operations of Company and Financial Results for the year ended 31st March, 2015.

1. FINANCIAL RESULTS Rs. In lakhs

2014-15 2013-14

Turnover Revenue 10787.92 11443.70

Gross Profit before 642.54 780.36 financial charges & depreciation

Less: Depreciation 173.33 289.15

Financial charges 440.17 481.50

Profit / (Loss) before 29.04 9.71 taxation

Tax expenses - -

Profit / (Loss) after 29.04 9.71 taxation

2. OPERATIONS

The Company achieved Total Revenue of Rs. 10787.92 Lakhs (including Other Income of Rs. 152.83 lakhs) and achieved profit after tax of Rs. 29.04 Lakhs for the Year ended 31st March, 2015 as against Total Revenue of Rs. 11443.70 lakhs (including Other Income of Rs. 150.63 lakhs) and profit after tax of Rs. 9.71 Lakhs for the Year ended 31st March, 2014. Non-availability of quality power, fluctuations in cotton prices and currency fluctuation (depreciation in Euro) have affected the performance of the Company.

3. SHARE CAPITAL

The authorized capital of the Company as on 31st March, 2015 was Rs. 35,25,00,000/- divided into 3,52,50,000 equity shares of Rs. 10/- each and paid-up capital was Rs. 4,90,85,760/- divided into 49,08,576 equity shares of Rs. 10/- each.

4. DIVIDEND

In view of insufficient profits for the year under review, the Board is unable to recommend dividend.

5. EXPORTS

During the year under review the company's exports were Rs. 22.49 Crores as against Rs. 26.89 crores of the previous financial year. Steep fluctuations of cotton prices and depreciation of Euro have affected the exports.

6. EXPANSION & MODERNISATION

Modernization and technological up-gradation programs continue in the Company to maintain competitiveness and achieve better quality. Company plans to modernize by adding balancing equipment with a capital cost of about Rs. 95.32 lacs. Stringent cost control measures remain in place in all possible areas and are regularly reviewed.

7. FUTURE OUTLOOK

The Company's efforts in development of new value added products are expected to yield better results. The company has further plans to modernize/ expand its operations at its spinning unit. In the bleached cotton business, the Company plans to produce new products such as surgical cotton rolls and cotton buds. This will help in good value addition to its product range and improve the prospects of the company in the coming years.

8. CORPORATE GOVERNANCE

A separate report on Corporate Governance is enclosed as a part of this Annual Report. A certificate from the Auditors of the Company regarding compliance with Corporate Governance norms stipulated under Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance.

9. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement is presented in a separate section forming part of the Annual Report.

10. ENVIRONMENT AND POLLUTION CONTROL

The manufacturing facility has obtained environmental clearance from Pollution Control Board concerned and is in compliance with all current environmental legislation. As an integral part of its environment protection drive, the Company ensures the very minimum quantity of generation of waste, low emission levels and low noise pollution levels during operations of its manufacturing facility.

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. RETIREMENT BY ROTATION

Pursuant to provisions of the Companies Act, 2013, Sri Badrinarayan Agarwal (DIN 00042123), Director will retire at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his re-appointment

B. APPOINTMENT

Smt Sushma Gupta (DIN 07147330) was appointed as an Additional Director who shall hold office till the date of this Annual General Meeting. A member proposed her candidature for appointment at the ensuing Annual General Meeting.

In terms of the Companies Act, 2013 Smt Sushma Gupta is proposed to be appointed as independent Director for a term of 5 years, not liable for retirement by rotation.

Brief resume of the Directors retiring by rotation and independent Director, nature of their expertise in specific functional areas and names of public companies in which they hold directorships as stipulated under clause 49 of the listing agreement with the Stock Exchange are given as Annexure to the Notice.

Sri B. Somasekhara Rao was appointed as Chief Financial Officer of the Company w.e.f. 30th May, 2014 and Company Secretary w.e.f. 9th February, 2015.

C. CESSATION

During the year under review, Sri Jeetender Kumar Agarwal and Sri Devender Kumar Agarwal resigned from the directorship of the Company from 31st March, 2015 and Sri B.R.S.Reddy, Vice President (Corp. Affairs) & Company Secretary resigned w.e.f. 7th February, 2015 in terms of the restructuring of the organization and pursuant to the sanctioned scheme of demerger. Sri Pankaj Goel, Independent Director also resigned from the Directorship from 31st March, 2015 citing personal pre-occupations. The Board places on record its appreciation for the valuable services and guidance rendered by Sri Jeetender Kumar Agarwal, Sri Devender Kumar Agarwal, Sri Pankaj Goel and Sri B.R.S.Reddy during their tenure as Director on the Board and as Company Secretary respectively.

D. EVALUATION OF THE BOARD'S PERFORMANCE

During the year, the Board adopted a formal performance evaluation policy 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's functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations 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 judgement etc. The evaluation of the Independent Directors and that of the Chairman was carried out by the entire Board excluding the Director being evaluated and the evaluation of Non-Independent Directors was carried out by the Independent Directors. A separate meeting of Independent Directors was also held during the year wherein the performance of Chairman, Board, Executive Directors was evaluated.

The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company.

E. REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is attached to this report as Annexure I.

F. DECLARATION BY INDEPENDENT DIRECTORS

All the Independent Directors of the Company have given declaration stating that they meet the criteria of independence as provided under Companies Act, 2013.

G. FAMILIARIZATION PROGRAMME OF INDEPENDENT DIRECTORS

Each newly appointed Independent Director is taken through a formal induction program including the presentation from the Managing Director on the Company's manufacturing, marketing, finance and other important aspects. The Company Secretary briefs the Director about their legal and regulatory responsibilities as a Director. The induction for Independent Directors include interactive sessions with Executive Committee Members, Business and Functional Heads, visit to the manufacturing site etc. The details of such program are available on company's website (www.suryavanshi.com).

12. AUDITORS' REPORT

A. STATUTORY AUDITORS

The Statutory Auditors of the Company, M/s. Brahmayya & Co, Chartered Accountants, Hyderabad will retire at the conclusion of ensuing Annual General Meeting and are eligible for reappointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for reappointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Statutory Auditors' Report does not contain any reservation, qualification or adverse remark.

B. SECRETARIAL AUDITOR

During the year, the Company has appointed M/s R & A Associates, Practising Company Secretaries as Secretarial Auditor. The Secretarial Audit report for the financial year 2014-15 is annexed herewith as Annexure II to this Report. The Secretarial Audit Report does not contain any reservation, qualification or adverse remark.

C. COST AUDITOR

Pursuant to Section 148 of Companies Act, 2013, the Board of Directors on the recommendation of Audit Committee appointed Aruna Prasad & Co., Cost Accountants as the Cost Auditors of the Company for the year 2015-16 and has recommended the remuneration to the shareholders for their ratification at the ensuing Annual General Meeting. The Auditor has confirmed that the appointment is within the prescribed limits and also certified that they are free from any disqualifications.

13. DIRECTORS' RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

(a) in the preparation of the annual accounts, the applicable accounting standards had 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;

(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.

14. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The Policy on materiality of related party transactions as approved by the Board may be accessed on the Company's website.

Your Directors draw attention of the members to Note 30 to the financial statement which sets out related party disclosures.

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

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, is annexed and marked Annexure III and forms part of this Report.

16. INTERNAL FINANCIAL CONTROLS

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

17. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The information required pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary in this regard.

No employee was in receipt of remuneration in excess of the limits prescribed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and hence the disclosure as required under Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not required.

18. POLICY ON SEXUAL HARASSMENT:

The Company has adopted policy on Prevention of Sexual Harassment of Employees at workplace in accordance with The Sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, the Company has not received any complaints pertaining to sexual harassment.

19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186:

The Company has not made any loan, given guarantee or provided security pursuant to the provisions of Section 186 of Companies Act, 2013. The details of investments made by the Company pursuant to the provisions of Section 186 of Companies Act, 2013 is provided in Note 10 to the financial statement.

20. DISCLOSURES:

A. EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company is annexed herewith as Annexure IV to this Report.

B. COMPOSITION OF AUDIT COMMITTEE

The Audit Committee comprises Sri R. Surender Reddy (Chairman), Sri Surender Kumar Agarwal, Sri Manish Gupta and Sri Rajender Kumar Agarwal as other members. All the recommendations made by the Audit Committee were accepted by the Board.

C. VIGIL MECHANISM

The Company has implemented a vigil mechanism policy to deal with instance of fraud and mismanagement, if any. It provides for the directors and employees to report genuine concerns and provides adequate safeguards against victimization of persons who use such mechanism. The Policy on vigil mechanism may be accessed on the Company's website at the link: http://www.suryavanshi.com/whistle- blower-policy.html. There were no complaints received during the year 2014-15.

D. NUMBER OF BOARD MEETINGS

The Board of Directors of the Company met Ten (10) times during the year. For further details, please refer report on Corporate Governance.

E. LISTING FEES

The Company confirms that it has paid listing fees for the year to BSE Limited where its shares are listed.

21. GENERAL

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

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

b. The Company has no subsidiaries, joint ventures or associate companies.

c. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

22. APPRECIATION:

The Board of Directors is pleased to place on record their appreciation of the co-operation and support extended by All India Financial Institutions, Banks and various State and Central Government Agencies.

The Board would also like to thank the Company's shareholders, customers, suppliers for the support and the confidence which they have reposed in the management. The Board place on record its appreciation of the contribution made by the employees at all levels for their hard work, solidarity, co-operation and support.

By order of the Board For Suryavanshi Spinning Mills Limited

Place : Secunderabad B.N.Agarwal Date : 16.05.2015 Executive Chairman

---

Mar 31, 2014

Dear Shareholders,

We have pleasure in presenting the 35th Annual Report on the business and operations of Company and Financial Results for the year ended 31st March, 2014 .

1.A. RESTRUCTURING OF THE COMPANY

With a view to ensure have focused growth and to have economies of scale in the respective areas of operations the Company had formulated Scheme of Arrangement by way of demerger between Suryavanshi Spinning Mills Ltd, Aananda Lakshmi Spinning Mills Ltd and Sheshadri Industries Ltd and their respective members and creditors . Hon''ble High Court at Hyderabad vide its Order dated 30th July 2014 sanctioned the above scheme of arrangement in accordance with the provisions of sections 391-394 of the companies Act,1956 and section 2(19AA) of the Income tax Act,1961 . The said Orders of the Hon''ble High Court were filed with Registrar of Companies,at Hyderabad on August 21, 2014 (Effective Date).The Appointed Date for the Scheme for Arrangement was April 1, 2013. Accordingly, Yarn Unit at Bhongir together with 4 acres of land with temporary structures in Survey Nos 558 and 560 situated at Aliabad village, Medchal Taluq, Shameerpet Mandal, Rangareddy District, Telangana of the company was transferred to and vested into Aananda Lakshmi Spinning Mills Limited (ALSML) and Yarn Unit at Rajna, Madhya Pradesh and Garment Units at Aliabad and Bhongir, in the state of Telangana of the Company were transferred to and vested into Sheshadri Industries Limited (SIL). On a going concern basis and the Appointed Date for the scheme was 01.04.2013.

The company shall continue to retain the residual business of yarn unit and Medical textile unit at Aliabad, Shameer pet mandal R.R. District in the state of Telangana.

The Demerger is expected to unlock and maximize value to the share holders of Suryavanshi spinning Mills ltd, Sheshadri Industries Ltd and Aananda Lakshmi spinning Mills Ltd through focused operations of all the three Companies .

B. SHARE CAPITAL

In terms of the Scheme of Arrangement, 37 equity share of Rs 10/- each fully paid up of Sheshadri Industries Ltd (Resulting Company -2)and 26 equity

share of of Rs 10/- each fully paid up of Aananda Lakshmi spinning Mills Ltd (Resulting Company -1) have been allotted to the shareholders of the Company for every 100 equity shares held in the Company . Pusuant to demerger and consequent to capital reduction / reorganization, 37 equity share of Rs 10/- each fully paid up of the Company were allotted for every 100 existing equity shares of the company. The paid up capital of the company stands reduced from Rs. 13,26,64,230 divided into 1,32,66,423 equity shares of Rs. 10/- each to Rs. 4,90,85,760 divided into 49,08,576 equity shares of Rs. 10/- each The shares of Suryavanshi spinning Mills ltd continue to be listed and shares of Sheshadri Industries Ltd and Aananda Lakshmi spinning Mills Ltd will be listed on the BSE Limited .

2. FINANCIAL RESULTS (Rs. in Lakhs) 2013-2014 2012-2013

Financial Results

Turnover Revenue 11443.71 27406.12

Gross profit before financial 780.36 56.80

charges & Depreciation Less: Depreciation 289.15 726.45

Financial charges 481.50 880.72

Profit / (Loss) Before 9.71 (1550.37) Taxation

Tax for Earlier years 0.00 5.27

Profit / (Loss) after taxation 9.71 (1555.64)

3. OPERATIONS

Company achieved Total Revenue of Rs. 114.44 Crores (including Other Income of Rs. 1.51 crores) and achieved a profit of Rs. 0.10 Crores for the Year ended 31st March, 2014 for the residual business consisting of yarn unit and Medical Textiles division at Alaibad, RR disritct,Telangana i.e. excluding the operations of yarn unit at Rajna together with Garments divisions in the state of Telangana and Yarn unit at Bhongir, Telangana consequent to the scheme of demerger approved by Hon''ble High Court at Hyderabad. Since it is the first report subsequent to Demerger previous year''s figures are not comparable.

4. DIVIDEND

In view of the in sufficient profits for the year under review, the Board is unable to recommend dividend.

5. EXPORTS

During the year under review the company''s exports were Rs. 26.89 Crores.

6. EXPANSION & MODERNISATION

Modernization and technological up-gradation programs continue in the Company to maintain competitiveness and achieve better quality. Company plans to modernize by adding balancing equipment with a capital cost of about Rs. 4 Crores. Stringent cost control measures remain in place in all possible areas and are regularly reviewed.

7. FUTURE OUTLOOK.

The performance of the Company has improved over last year since the company has taken various measures in Human Resources policies like ensuring attendance of labour force adequately. The prospects of the company is expected to be promising with the expected stability of cotton prices and the benefits of the ongoing modernization and expansion schemes will be accruing from the current year.

8. CORPORATE GOVERNANCE:

A separate report on Corporate Governance is enclosed as a part of this Annual Report. A certificate from the Auditors of the Company regarding compliance with Corporate Governance norms stipulated under Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance.

9. ENVIRONMENT AND POLLUTION CONTROL:

Company continues to give top priority to maintenance and performance improvement of all pollution abatement facilities like effluent treatment plants, air emission control and waste disposal facilities at its manufacturing plants. As far as possible rainwater harvesting and treated effluent recycling is being carried out at manufacturing plants to reduce dependence on water from other natural resources. Training, awareness and learning have been always at the forefront of Company''s journey to become world class in environmental performance. It has inculcated the habit to be in harmony with nature and in this context, afforestation, maintenance of green belts and gardens, and reuse of treated water in horticulture activities are routine practices. Environment impact assessment and risk analysis have been performed right from the stage of planning for implementation of all new major expansion projects to incorporate the necessary measures to minimize adverse environmental impact.

All manufacturing facilities have obtained environmental clearance from the Pollution Control Board concerned and are in compliance with all current environmental legislation. As an integral part of its environment protection drive, the Company ensures the very minimum quantity of generation of waste, low emission levels and low noise pollution levels during operations of all manufacturing facilities.

10. DIRECTORS

Pursuant to provisions of the Companies Act, 1956, Sri Jeetender Kumar Agarwal (DIN 0041946) and Sri R.Surender Reddy (DIN 0008372), Directors will retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

Sri. Pankaj Goel (DIN 00010059) and Sri Manish Gupta (DIN 00526638) were appointed as an additional Directors who are holding office till the date of ensuing Annual General Meeting. A member proposed their appointment at the ensuing Annual General Meeting.

In terms of the Companies Act, 2013 all the Independent Directors – Sri R. Surender Reddy, Sri Surender Kumar Agarwal (DIN 00281576), Sri Pankaj Goel and Sri Manish Gupta are proposed to be appointed as independent Directors for a term of 5 years, not liable for retirement by rotation.

The necessary Resolutions for obtaining the approval of Members for the re-appointment of Sri Badrinarayan Agarwal (DIN 00042123) and Sri Rajender Kumar Agarwal (DIN 0041892) as Executive Chairman and Managing director respectively have also been included in notice for the ensuing Annual General Meeting Members approval is sought for the above appointments of Directors.

Brief resume of the Directors retiring by rotation, independent Directors nature of their expertise in specific functional areas and names of public companies in which they hold directorships as stipulated under clause 49 of the listing agreement with the Stock Exchange are given on Corporate Governance elsewhere in the Annual Report.

The Board regret to record that Sri Akkineni Nageswara Rao Director who had been associated with the company for morethan 22 years passed away on 22.01.2014. Board places on record its condolences for the sad demise of Sri A. Nageswara Rao and places on record its appreciation for the valuable services and guidance rendered by Sri A. Nageswara Rao during the tenure of his term.

11. AUDITORS:

The Statutory Auditors of the Company, M/s. Brahmayya & Co, Chartered Accountants, Hyderabad will retire at the conclusion of ensuing Annual General Meeting and are eligible for reappointment.

12. AUDITORS'' REPORT:

The Auditors'' Report to the Shareholders does not contain any reservation, qualification or adverse remark.

13. COST AUDITORS:

Pursuant to the provisions of Section 148 of the Companies Act, 2013, Ms.K.Aruna Prased cost Accountants (Membership No.11816), were appointed as Cost Auditor to submit the reports to the Central Government. The reports for the year 2012-13 were submitted on 27.09.2013 (Due date 27.09.2013) and for the year 2013-14 will be submitted on or before due date.

14. DIRECTORS'' RESPONSIBILITY STATEMENT:

On the basis of compliance certificates received from the concerned executives of the respective Divisions of the Company and subject to disclosures in the annual accounts, as also on the basis of the discussion with the Statutory Auditors of the Company from time to time, The Board of Directors of the company confirms:

i. that in the preparation of the annual accounts, the applicable accounting standards has been followed and there has been no material departures:

ii. that selected accounting policies were applied consistently and Directors 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 31st March,2014 of the profit of the Company for year ended on that date;

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

iv. The Annual Accounts have been prepared on a going concern basis.

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

A statement under section 217 (1) (e) of the Companies Act,1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, is annexed and marked Annexure ''A'' and forms part of this Report.

16. DEPOSITS

The company has not invited/accepted deposits from the public.

17. PARTICULARS OF EMPLOYEES:

No employee was in receipt of remuneration in excess of the limits prescribed under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules,1975 and hence the prescribed information is not required to be given.

18. CASH FLOW ANALYSIS:

In conformity with the provisions of clause 32 of the Listing Agreement the Cash Flow Statement for the year ended 31.03.2014 is annexed hereto.

19. APPRECIATION:

The Board of Directors is pleased to place on record their appreciation of the co-operation and support extended by All India Financial Institutions, Banks and various State and Central Government Agencies.

The Board would also like to thank the Company''s shareholders, customers, suppliers for the support and the confidence which they have reposed in the management. The Board place on record its appreciation of the contribution made by the employees at all levels for their hard work, solidarity, co-operation and support.

For and on behalf of Board of Directors

Place : Secunderabad (B.N. AGARWAL) Date: 03rd September, 2014 Executive Chairman

---

Mar 31, 2013

To The Members

The have pleasure in presenting the 34th Annual Report of the Company along with the Audited Statements of Account for the year ended 31st March, 2013.

1. FINANCIAL RESULTS

( in Lakhs) Particulars 2012-2013 2011-2012

Total Revenue 27,406.12 27,714.35 Gross profit before financial

cost & Depreciation 56.80 947.51

Less: Depreciation 726.45 713.76

Financial charges 880.72 1047.93

Profit / (Loss) Before Taxation (1550.37) (814.18)

Tax for Earlier years 5.27 2.60

Profit / (Loss) after taxation (1555.64) (816.78)

2. OPERATIONS

Company achieved a Total Revenue of 274.06 crores (including Other Income of 5.81 crores) and incurred a loss of 15.50 crores for the Year ended 31st March, 2013 as against Total Revenue of 277.14 crores (including other income of 6.41 crores) and Loss of 8.14 crores for the previous year ended 31st March, 2012.

The Company''s performance was adversely affected primarily due to steep increase in the power cost coupled with loss of production during the second quarter of the year on account of non availability of power. Cost of power increased abnormally due to the levy of Fuel Surcharge by APCPDCL which is higher by 30% of normal power cost supplied by APCPDCL. In addition to that Company resorted to buy private power at a unit rate as high as 7.50 through open access in order to keep the work force available and machinery running. The power cost during the year 2012-13 has gone up by 12.42 crores over the previous year s power cost of 23.50 crores.

3. DIVIDEND

In view of the adverse factors referred above, your Company incurred losses for the year under review, and the Board regret their inability to recommend any dividend during the year.

4. EXPORTS

During the year 2012-13 the Company''s exports were 61.21 crores (including merchant exports of 3.53 crores) as against the previous year s export turnover of 63.78 crores (including merchant exports of 5.91 crores).

5. EXPANSION & MODERNISATION

Modernization and technological up-gradation programs continue at all the units of the Company to maintain competitiveness and to achieve better quality. Stringent cost control measures remain in place in all possible areas and are regularly reviewed. During the year 2012-13, capital expenditure to the tune of 24.22crores was incurred towards the installation of Automatic Cone Winding machines at its units situated at Aliabad and Bhongir and for the addition of 8400 spindleage at the Rajna unit of the Company, as against Capital Expenditure of 12.77 crores incurred in the previous year.

6. FUTURE OUTLOOK

During the year under review, your Company has undertaken expansion at its Rajna Unit, Madhya Pradesh with an investment of 16.26 Crores by installing an additional 8400 ultra modern spindles. The said expansion cum modernization was completed and trial productions are under progress. The Company also under took the up-gradation and modernization at its units situated at Bhongir and Aliabad in the State of Andhra Pradesh With the expected stability of cotton prices and the completion of ongoing modernization and expansion schemes at its units, the prospects of the Company are expected to be promising.

7. CORPORATE GOVERNANCE

A separate report on Corporate Governance is enclosed as a part of this Annual Report. A certificate from the Auditors of the Company regarding compliance with Corporate Governance norms stipulated under Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance.

8. ENVIRONMENT AND POLLUTION CONTROL

Suryavanshi continues to give top priority to maintenance and performance improvement of all pollution abatement facilities like effluent treatment plants, air emission control and waste disposal facilities at its manufacturing plants. As far as possible rainwater harvesting and treated effluent recycling is being carried out at manufacturing plants to reduce dependence on water from other natural resource. Training, awareness and learning have been always at the forefront of Suryavanshi''s journey to become world class in environmental performance. It has inculcated the habit to be in harmony with nature and in this context, afforestation, maintenance of green belts and gardens, and reuse of treated water in horticulture activities are routine practices. Environment impact assessment and risk analysis have been performed right from the stage of planning for implementation of all new major expansion projects to incorporate the necessary measures to minimize adverse environmental impact.

All manufacturing facilities have obtained environmental clearances from the respective Pollution Control Boards and are in compliance with all current environmental legislation. As an integral part of its environment protection drive, the Company ensures the very minimum quantity of generation of waste, low emission levels and low noise pollution levels during operations of all manufacturing facilities.

9. DIRECTORS

Pursuant to provisions of Section 255 and 256 of the Companies Act, 1956, Dr.Akkineni Nageswara Rao and Sri.D.K.Agarwal, Directors will retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

The Board regrets to record that Sri. B.N.Rathi, Director who had been associated with the Company for the last 24 years passed away on 10th January, 2013. Board places on record its condolences for the sudden demise of Sri.

B.N.Rathi.The Board also places on record its appreciation for the valuable services and guidance rendered by Sri. B.N.Rathi during his tenure.

The Company has repaid the entire loan amount to IDBI Bank Limited (IDBI), and as a result, Sri. G. Ganesh has been withdrawn as Nominee Director of the IDBI from the Board w.e.f. 3rd June, 2013. The Board also places on record its appreciation for the valuable services and guidance rendered by Sri G. Ganesh during his tenure.

Your Directors co-opted Sri. Surender Kumar Agarwal as an additional Director with effect from 9th March, 2013. It is proposed to regularize his appointment in the ensuing Annual General Meeting.

The necessary Resolution for obtaining the approval of Members has been included in notice for the ensuing Annual General Meeting.

Brief resume of the Directors retiring by rotation, nature of their expertise in specific functional areas and names of public companies in which they hold directorships as stipulated under clause 49 of the listing agreement with the Stock Exchange are given on Corporate Governance elsewhere in the Annual Report.

10. DISINVESTMENT IN THE FORTUNE EAGLE (HK) TRADING LIMITED - ERSTWHILE SUBSIDIARY COMPANY

The Company during the year 2012-13 disinvested its entire shareholding of one Hong kong dollar in the wholly owned subsidiary of M/s. fortune Eagle(HK)Trading Limited, Hong Kong. With this Fortune Eagle (HK) Trading Limited ceased to be the subsidiary of your Company.

11. AUDITORS

The Statutory Auditors of the Company, M/s. Brahmayya & Co, Chartered Accountants, Hyderabad will retire at the conclusion of ensuing Annual General Meeting and are eligible for reappointment.

12. AUDITORS'' OBSERVATIONS

With reference to observations made by the statutory auditors regarding the application of the short term funds for long term purposes, we have to state that due to unexpected delay in securing the long term funds for the company s expansion cum modernization schemes the company utilized short term funds for this purpose to avoid project over runs. The company has already initiated steps to rectify this anomaly.

13. COST AUDITORS

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956, Ms. K. Aruna Prasad, Cost Accountants (Membership No.11816), has been appointed as Cost Auditor to submit the reports to the Central Government. The reports for the year 2011-12 were submitted on 31st January, 2013 (Due date 31-3-2013) and for the year 2012-13 will be submitted on or before due date.

14. DIRECTORS'' RESPONSIBILITY STATEMENT

On the basis of compliance certificates received from the concerned executives of the respective Divisions of the Company and subject to disclosures in the annual accounts, as also on the basis of the discussion with the Statutory Auditors of the Company from time to time, we state:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and proper explanations provided relating to material departures, if any;

ii) that the Directors have followed appropriate 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 31st March,2013 and of the loss of the Company for that year;

iii) that the Directors have taken proper and sufficient care to ensure 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, if any;

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

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

A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and marked Annexure ''A'' and forms part of this Report.

16. DEPOSITS

The Company has not invited/accepted deposits from the public.

17. PARTICULARS OF EMPLOYEES

No employee was in receipt of remuneration in excess of the limits prescribed under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules,1975 and hence the prescribed information is not required to be given.

18. CASH FLOW ANALYSIS

In conformity with the provisions of clause 32 of the Listing Agreement the Cash Flow Statement for the year ended 31st March, 2013 is annexed hereto.

19. ACKNOWLEDGEMENTS

The Board of Directors are pleased to place on record their appreciation of the co-operation and support extended by All India Financial Institutions, Banks and various State and Central Government Agencies.

The Board also wishes to place on record its appreciation of the valuable services rendered by the employees of the Company.

For and on behalf of the Board of Directors

(B.N.Agarwal)

Chairman & Managing Director

Place : Secunderabad

Date : 07th May, 2013

---

Mar 31, 2012

The have pleasure in presenting the 33rd Annual Report of the Company along with the audited statements of Account for the year ended 31 st March, 2012.

FINANCIAL RESULTS

(Rs. in Lakhs)

Particulars 2011-2012 2010-2011

Total Revenue 27,714.35 28,729.29 Gross profit before financial cost and Depreciation & 947.51 3,274.15 amortisation expense

Less: Depreciation & 713.76 744.81 amortisation expense

Financial charges 1047.93 915.46

Profit / (Loss) Before Taxation (814.18) 1,613.88

Tax for earlier years 2.60 -

Profit / (Loss) after taxation (816.78) 1,613.88

OPERATIONS

The company achieved a Total revenue of Rs.277.14 crores (including other income of Rs.6.41 crores) and incurred loss of Rs.8.17 crores for the year ended 31st March, 2012 as against turnover of Rs.287.29 crores (including other income of Rs.5.38 crores) and profit of Rs. 16.14 crores respectively in the previous year.

The resultant loss incurred by the Company is attributable to many factors: global recession, subdued demand and high cost carrying inventory.

The high cost of inventory procured during October 2010 to March 2011 was utilized for producing yarn during the financial year 201 1-12 and the final product had to be sold at less than input cost. Due to sharp drop in yarn prices the spread between yarn and raw materials has plummeted in a short span of less than 12 months on account of consumption of high cost inventory procured during October 2010 to March 201 1.

The impact of short-term mismatch between consumption and production and subdued demand adversely impacted the revenue of your Company.

DIVIDEND

In view of the losses incurred by the company, the Directors regret their inability to recommend any dividend.

EXPORTS

Exports during the year were Rs. 63.78 crores as against Rs. 1 17.60 crores during last year. Exports were lower during the year mainly due to government restrictions on yarn exports and unremunerative prices in the global market.

EXPANSION & MODERNISATION

Modernisation and technological up-gradation programmes continue at all the units of the Company to maintain competitiveness and achieve better quality. Stringent cost control measures remain in place in all possible areas and are regularly reviewed. During the year under review, the capital expenditure of Rs. 12.77 crores has been incurred for medical textile unit and up- gradation of machinery at its spinning units as against capital expenditure of Rs.6.84 crores in the previous year.

FUTURE OUTLOOK

The company proposes to undertake modernisaton of all three spinning units and also to increase the present Garment capacity. The estimated project cost for the modernization at the spinning divisions and expansion of Garment capacity will be around Rs.24.24 crores. With the on going completions of modernisation and expansion plans the company foresees a brighter future.

COMPULSORY ACQUISITION OF PART OF LAND OF BHONIGIR AND RAJNA UNITS OF THE COMPANY

During the year under review the National Highways Authority of India under the provisions of National Highways Act. 1956 acquired lands admeasuring 7,689 square meters and 1390 square meters of Bhonigir Unit and Rajna Unit of the Company respectively for the purpose of road widening. The Company has been awarded an amount of Rs. 108.03 lakhs and Rs 4.09 lakhs respectively towards the cost of acquisition of lands and loss of structures. Aggrieved by the inadequate compensation awarded by the the authorities for properties of Bhongir unit the company has initiated arbitration proceedings.

CORPORATE GOVERNANCE

Reports on the Management Discussion and Analysis and on Corporate Governance are enclosed as a part of this Annual Report. A certificate from the Auditors of the Company regarding compliance with Corporate Governance norms stipulated under Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance.

GREEN INITIATIVE

Following the "Green Initiative for Corporate Governance", your company proposes send notices and documents to the shareholders by electronic means, thus reducing the paper consumption to an extent.

Your company appreciates the shareholders for wholeheartedly agreeing for electronic communications.

Shareholders, who have not yet registered their email id's are once again requested to send the E- communication registration form to their depository participants or to the company, to make this green initiative 100% successful.

ENVIRONMENT AND POLLUTION CONTROL

Suryavanshi continues to give top priority to maintenance and performance improvement of all pollution abatement facilities like effluent treatment plants, air emission control and waste disposal facilities at its manufacturing plants. As far as possible rainwater harvesting and treated effluent recycling is being carried out at manufacturing plants to reduce dependence on water from other natural resources. Training, awareness and learning have been always at the forefront of Suryavanshi's journey to become world class in environmental performance. It has inculcated the habit to be in harmony with nature and in this context, afforestation, maintenance of green belts and gardens, and reuse of treated water in horticulture activities are routine practices. Environment impact assessment and risk analysis have been performed right from the stage of planning for implementation of all new major expansion projects to incorporate the necessary measures to minimize adverse environmental impact.

All manufacturing facilities have obtained environmental clearance from the respective Pollution Control Boards and are in compliance with all current environmental legislation. As an integral part of its environment protection drive, the Company ensures the very minimum quantity of generation of waste, low emission levels and low noise pollution levels during operations of all manufacturing facilities.

DIRECTORS

Pursuant to provisions of Section 255 and 256 of the Companies Act, 1956, Sri B.N.Rathi and Sri R.Surender Reddy Directors will retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

The necessary Resolutions seeking approval of the members for re-appointment of Sri.J.K.Agarwal and Sri.D.K.Agarwal on the revised terms as well as the increase in the remuneration payable to Sri.B.N.Agarwal and Sri.R.K.Agarwal have been included in notice for the ensuing Annual General Meeting.

Brief resume of the Directors retiring by rotation, nature of their expertise in specific functional areas and names of public companies in which they hold directorships as stipulated under clause 49 of the listing agreement with the Stock Exchange are given elsewhere in the Annual Report.

FORTUNE EAGLE (HK) TRADING COMPANY LIMITED, Hong Kong - SUBSIDIARY COMPANY

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of the Subsidiary Company is not being attached with the Balance Sheet of the Company. The Company will make available the Annual Accounts of the subsidiary company and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary company will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary company. There are no operation in the subsidiary company during the year. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary company. The information required to be furnished of the subsidiary company is provided elsewhere in the Annual Report.

AUDITORS

The Statutory Auditors of the Company, M/s. Brahmayya & Co, Chartered Accountants, Hyderabad will retire at the conclusion of ensuing Annual General Meeting and are eligible for reappointment.

AUDITORS' REPORT

The Auditors' Report to the Shareholders does not contain any qualification or adverse remark.

COST AUDITORS

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956 Ms. K. Aruna Prasad Cost Accountants (Membership No.11816), were appointed Cost Auditors to render reports to the Central Government. The report for the year 2010-11 were submitted on September 30th, 201 1 (due date September 30, 201 1) and for the year 201 1-12 will be submitted on or before due date.

DIRECTORS' RESPONSIBILITY STATEMENT

On the basis of compliance certificates received from the concerned executives of the respective Divisions of the Company and subject to disclosures in the annual accounts, as also on the basis of the discussion with the Statutory Auditors of the Company from time to time, we state:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and proper explanations provided relating to material departures, if any;

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

iii) that the Directors have taken proper and sufficient care to ensure 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, if any;

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

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and marked Annexure-1 and forms part of this Report.

DEPOSITS

The company has not invited/accepted deposits from the public.

PARTICULARS OF EMPLOYEES

No employee was in receipt of remuneration in excess of the limits prescribed under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 and hence the prescribed information is not required to be given.

CASH FLOW STATEMENT

In conformity with the provisions of clause 32 of the Listing Agreement the Cash Flow Statement for the year ended 31.03.2012 is annexed hereto.

APPRECIATION

The Board places on record its deep appreciation of the devoted services of the loyal workers, executives and other staff of the Company, who have contributed in no small measure to the performance and the Company's continued inherent strength.

It also extends grateful thanks to the Central and various State Governments, the investors, the banking circles, financial institutions and district level authorities for their continued support extended to the Company from time to time. Shareholders' appreciation of the managements' efforts expressed at the general meetings of the Company and otherwise, is a great fillip to strive for better performance.

For and on behalf of the Board of Directors

(B.N.Agarwal)

Chairman & Managing Director

Place : Secunderabad

Date : 30th May, 2012

---

Mar 31, 2011

The Directors are pleased to present their 32nd Annual Report on the business and operations of the Company and the financial results for the year ended 31 st March, 2011.

(Rs. in Lakhs)

2010-11 2009-10

Financial Results

Net Turnover including

other income 29,057.02 18,864.62

Gross profit before financial

charges & Depreciation 3,274.46 1,920.51

Less: Depreciation 744.81 740.47

Finance charges 915.46 875.03

Profit/(Loss) Before Taxation 1,614.19 305.01

Provision for Wealth Tax 0.31 0.50

Profit/(Loss) after taxation 1,613.88 304.51

Profit(Loss) Brought Forwarded

from last year (556.41) (860.92)

Balance carried to Balance Sheet 1,057.47 (556.41)

OPERATIONS

The Indian Textile Industry has done well after coming out of the recession. The Companys operations resulted in an improved turnover of Rs.290.57 Crores registering a good growth of about 54.02% over the previous year. The profit after tax was at Rs. 16.14 Crores as against the Rs.3.05 Crores in the previous year. This reflects the overall improvement in all facets of the business.

RAW MATERIALS:

During the year the prices of Raw Materials has drastically increased by about 61.81 %. All other inputs such as consumables, packing, repairs and maintenance to machineries have increased due to inflation. The ratio to Raw Materials to revenue has increased from 60.57% to 63.64%.

YARN:

The aggregate production of Yarn, during the year 2010-11, in Bhongir and Aliabad units in Andhra Pradesh and Rajna in Madhya Pradesh was 137.86 lakhs Kgs as against the production of 123.20 lakhs Kgs during the previous year.

READYMADE GARMENTS:

Improved international market scenario in the current year coupled with increased realization, enabled the company to achieve better performance. Readymade Garments production during the year 2010-11 was 20.08 lakh pieces as against 16.04 lakh pieces in the previous year, thus registering a growth of about 25%.

DIVIDEND

With a view to conserve the financial resources, the Board of Directors are not recommending Dividend during the year under review.

CAPITAL EXPENDITURE

Continuous Modernization is essential in the Spinning Industry to meet the stringent quality parameters and during the year under review, incurred capital expenditure of Rs. 684.23 Lakhs for up-gradation of machinery and balancing equipments at its units as against Capital Expenditure of Rs.332.22 lakhs in the previous year.

EXPORTS

The exports during the year were Rs. 12150.16 lakhs (including merchant exports of Rs.387.13 lakhs) as against the export turnover of Rs.3462.15 lakhs (including merchant exports of Rs. 137.07 lakhs) during the previous year registering a significant growth of around 250.94% over the previous year.

With the revival from the economic slow down in the major markets abroad, export of textiles products from the Country has picked up. The Company has concentrated on continuous product development and

significant quality improvement and developed the value added products. The increased business from the existing customers is an indication of the trust the Company enjoys in the market place. The company also explored the new markets in the overseas markets of German and European

countries for exports of readymade garments and absorbent bleached cotton. The company has substantially improved the various styles of readymade garments to suit the requirement of German and European countries

FUTURE OUTLOOK

The company proposes to increase the spindleage from 98288 spindles to 125504 spindles by setting up state of art new spinning unit of 27216 spindles and expansion and modernization of all three existing spinning units. The company also proposes to increase the garments capacity from 10000 pieces per day to 20000 pieces per day by setting up state of art new garment unit with capacity of 10000 pieces per day. The estimated project cost for new spinning unit and modernization cum expansion is around Rs. 109.47 crores and for new garment unit is around Rs.7.38 crores with the on going expansion proposals the prospects of the company are expected to be promising.

DIRECTORS

Pursuant to provisions of Section 255 and 256 of the Companies Act, 1956, Dr.Akkineni Nageswara Rao and Sri D.K.Agarwal Directors will retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

Though Sri.D.K.Agarwal was appointed as Whole-time Director for a period of five years w.e.f. 01.10.2007 by the members at the Annual General Meeting held on 26.09.2008, to comply with the statutory requirement of retirement of Directory by rotation, pursuant to Sections 255 and 256 of the Companies Act, 1956, the appointment of Sri.D.K.Agarwal is subject to retirement by rotation. Accordingly, Sri.D.K.Agarwal is retiring by rotation on his reappointment, by the Members at the ensuing Annual General Meeting, the other terms and

conditions of appointment of Sri.D.K.Agarwal as Whole- time Director shall remain unaltered.

Brief resume of the Directors retiring by rotation, nature of their expertise in specific functional areas and names of public companies in which they hold directorships as stipulated under clause 49 of the listing agreement with the Stock Exchange are given on Corporate Governance elsewhere in the Annual Report.

AUDIT COMMITTEE

The Audit Committee met five times during the year under review.

CORPORATE GOVERNANCE

Pursuance to Clause 49 of the Listing Agreement with the Stock Exchange, a detailed report on the Management Discussion and Analysis, Corporate Governance Report and Additional information to the Shareholders are made part of this Annual Report.

GREEN INITIATIVE

As part of "Green Initiative for Corporate Governance", recently, the government has allowed companies to send notices and documents to their shareholders electronically to facilitate paperless communication

This will ensure prompt communication and avoid loss of documents in transit.

Hence, shareholders are requested to register their email Ids with their depository participants or with the Registrars of the company M/s.Sathguru Management Consultants Private Limited.

RESPONSIBILITY STATEMENT OF THE BOARD OF DIRECTORS

The Board of Directors of the Company confirms:

1. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

2. that the selected accounting policies were applied consistently and the Directors made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2011 and of the profit of the Company for the year ended on that date.

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

4. that the annual accounts have been prepared on a going concern basis.

AUDITORS

The Statutory Auditors of the Company, M/s. Brahmayya & Co, Chartered Accountants, Hyderabad will retire at the conclusion of ensuing Annual General Meeting and are eligible for reappointment.

AUDITORS QUALIFICATION:

The qualification made by the Auditors in their report on the accounts of the company for the year ended 31 st March, 2011 have been dealt with in the Notes on Accounts, which are self-explanatory.

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

The details as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given at Annexure-I.

DEPOSITS

The company has not invited/accepted deposits from the public.

EMPLOYEES

No employee was in receipt of remuneration in excess of the limits prescribed under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 and hence the prescribed information is not required to be given.

ACKNOWLEDGEMENTS

The Board of Directors is pleased to place on record their appreciation of the co-operation and support extended by All India Financial Institutions, Banks and various State and Central Government Agencies.

The Board would also like to thank the Companys shareholders, customers, suppliers for the support and the confidence which they have reposed in the management. The Board place on record its appreciation of the contribution made by the employees at all levels for their hard work, solidarity, co-operation and support.

For and on behalf of the Board of Directors

(B.N.Agarwal) Chairman & Managing Director

Place : Secunderabad Date : 27th May, 2011

---

Mar 31, 2010

The Directors are pleased to present their 31st Annual Report on the business and operations of the Company and the financial results for the year ended 31st March, 2010.

(Rs. in Lakhs)

2009-10 2008-09

Financial Results

Net Turnover including

other income 18,865 16,194

Gross profit before financial

charges & Depreciation 1,920 321

Less: Depreciation 740 735

Finance charges 875 974

Profit/(Loss) Before Taxation 305 (1,388)

Provision for Income Tax - -

- Deferred Tax - -

- Fringe Benefit Tax - 6

Profit/(Loss) after taxation 305 (1394) Profit/(Loss) Brought Forwarded

from last year (861) 533

Amount available for appropriation 305 (861)

Balance carried to Balance Sheet (556) (861)

OPERATIONS

After a long recessionary phase, the Textile Industry started witnessing turnaround. Factors which helped the industry was good cotton crop, increased demand in domestic as well as international market. This trend is expected to continue in the current year also.

The Company, during the year 2009-10, achieved a turnover of Rs. 188.65 Crores as against the turnover of Rs. 161.94 Crores and earned Profit After Tax of Rs. 3.05 Crores as against the loss of Rs. 13.94 Crores respectively in the previous year.

YARN

The aggregate production of Yarn, during the year 2009-10, in Bhongir and Aliabad units in Andhra Pradesh and Rajna in Madhya Pradesh was 123.20 lakhs Kgs as against the production of 119.21 lakhs kgs during the previous year.

READYMADE GARMENTS

Improved international market scenario since end 2009 onwards coupled with increased realization, enabled the company to achieve Readymade garments production during the year 2009-10 of 16.04 lakh pieces as against 10.72 lakh pieces in the previous year, thus registering robust growth of about 50%.

DIVIDEND

In view of the insufficient profits earned by the Company, the Directors regret their inability to recommend Divided.

CAPITAL EXPENDITURE

Continuous Modernization is essential in the Spinning Industry to meet the stringent quality parameters and your company during the year under review, incurred capital expenditure of Rs.332.22 lakhs for up-gradation of machinery and balancing equipments at its units as against Capital Expenditure of Rs.695.53 lakhs in the previous year.

EXPORTS

The exports during the year were Rs.35.01 crores including merchant exports of Rs.1.37 Crores as against the export turnover of Rs.22.58 Crores including merchant exports of Rs.51 Lakhs during the previous year.

International markets have picked-up after the recessionary trends have eased. The company is confident of capitalizing on the favourable market conditions prevailing both within the country and abroad.

INCREASE IN THE PAID-UP EQUITY CAPITAL

Your company has allotted 19,50,000 Equity Shares of Rs.10/- each to non-promoters at a premium of Rs.5/- per share, Consequent upon the allotment of Equity Shares, the paid-up capital of the Company stands increased to Rs. 13,27,09,230/- The said funds were utilized for augmenting the longterm resources of the company.

FUTURE OUTLOOK

Textile Industry recovered faster than other sectors from the global recession.

The textile industry outlook is definitely positive with increased cotton production, though prices have touched highest ever. The garment industry needs support by way of flexible labour laws to enable the industry to remain competitive in the current international market scenario.

Technology Upgradation Fund Scheme (TUFS)

Of all the schemes introduced by the Government of India, TUFS has contributed the maximum to the modenisation and enhancement of the capacities of all facets of Textile Industry. The interest subsidy has facilitated investments by the Industry.

DIRECTORS

Pursuant to provisions of Section 255 and 256 of the Companies Act, 1956, Sri B.N.Rathi and Sri R.Surender Reddy Directors will retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

The terms of appointment of Sri R.K.Agarwal, Joint Managing Director will be expiring on 30th October, 2010. The necessary resolutions seeking approval of the members for the appointment and the remuneration payable to Sri R.K.Agarwal has been included in the notice for the ensuing Annual General Meeting.

Brief resume of the Directors retiring by rotation, nature of their expertise in specific functional areas and names

of public companies in which they hold directorships as stipulated under clause 49 of the listing agreement with the Stock Exchange are given on Corporate Governance elsewhere in the Annual Report.

CORPORATE GOVERNANCE

Pursuance to Clause 49 of the Listing Agreement with the Stock Exchange, a detailed report on the Management Discussion and Analysis, Corporate Governance Report and Additional information to the Shareholders are made part of this Annual Report.

RESPONSIBILITY STATEMENT OF THE BOARD OF DIRECTORS

The Board of Directors of the Company confirms:

1. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure ;

2. that the selected accounting policies were applied consistently and the Directors made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the profit of the Company for the year ended on that date.

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

4. that the annual accounts have been prepared on a going concern basis.

AUDITORS

The Statutory Auditors of the Company, M/s. Brahmayya & Co, Chartered Accountants, Hyderabad will retire at the conclusion of ensuing Annual General Meeting and are eligible for reappointment.

AUDITORS QUALIFICATION

The qualification made by the Auditors in their report on the accounts of the company for the year ended 31st March, 2010 have been dealt with in the Notes on Accounts, which are self-explanatory.

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

The details as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in Annexure - I.

DEPOSITS

The company has not invited/accepted deposits from the public.

EMPLOYEES

No Employee was in receipt of remuneration in excess of the limits prescribed under Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 and hence the prescribed information is not required to be given.

ACKNOWLEDGEMENTS

The Board of Directors are pleased to place on record their appreciation of the co-operation and support extended by All India Financial Institutions, Banks and various State and Central Government Agencies.

The Board would also like to thank the Companys shareholders, customers, suppliers for the support and the confidence which they have reposed in the management. The Board place on record its appreciation of the contribution made by employees at all levels for their hard work, solidarity, cooperation and support

For and on behalf of the Board of Directors

(B.N.Agarwal)

Chairman & Managing Director

Place : Secunderabad

Date : 20th May, 2010