Annual Report - Raymond - 2010-2011

RAYMOND LIMITED

ANNUAL REPORT 2010-2011

DIRECTOR'S REPORT

DEAR MEMBERS,

Your Directors are pleased to present their 86th report on the business and
operations of your Company together with the Audited Statement of Accounts
for the year ended March 31, 2011.

1. CORPORATE OVERVIEW

Raymond Limited is India's leading Textile and Branded clothing Company
with interests in engineering (files, tools and auto components) having its
corporate headquarters in Mumbai.



The Company prepares its financial statements in compliance with the
requirements of the Companies Act, 1956, and the Generally Accepted
Accounting Principles (GAAP) in India. Overall the financial statements
have been prepared on the historical cost basis.

2. FINANCIAL HIGHLIGHTS

With the economic revival gathering momentum, a clutch of growth trajectory
initiatives enabled your Company to deliver positive growth and further
consolidate its leadership in its core businesses. FY 2011 has been both
challenging and momentous for your Company. The resilience and inherent
strength of your Company's superior technology-based manufacturing, deep
pan-India retail network accompanied by strong and successful brands were
the key-drivers that enabled your Company to deliver better performance
with improvements across key parameters in FY 2011.

A significant development during the year under review has been the
amicable solution arrived by the Company with the Workmen Union at the
high-cost Thane Textile factory. The Voluntary Separation Scheme package of
Rs. 238 crore was signed in October 2010 covering over 1850 workers. Your
Directors wish to compliment workers of the Thane Unit for the peaceful
settlement and wish them and their familes all the very best for the
future. The amalgamation of erstwhile Raymond Apparel Limited with
Solitaire Fashions Limited during FY 2011 has enabled to optimize
operational efficiencies and rationalise costs. As per the approvals
granted by the Hon'ble High Courts, Bombay and Madras respectively under
Section 391-394 of the Companies Act, 1956 the Assets and Liabilities of
erstwhile Raymond Apparel Limited have been transferred to Solitaire
Fashions Limited with effect from April 1, 2009. Subsequently, as per the
aforesaid High Courts' Orders, the name of Solitaire Fashions Limited has
been changed to Raymond Apparel Limited.

For the Financial Year ended March 31, 2011, the gross turnover of your
Company was Rs.1496.53 crore as compared to Rs.1339.37 crore in the
previous year. Profit before tax and exceptional items was Rs. 100.02 crore
as against Rs.18.88 crore in the previous year. The net loss after
exceptional items, prior year adjustments and provision for taxes was of
Rs. 100.19 crore as against a net profit of Rs.25.06 crore last year. The
loss is on account of the exceptional item of the one-time workers
settlement at the Company's Thane Textile Unit amounting to Rs.238 crore.
In view of the divestment of Files business effective October 1, 2009,
figures of the current periods are not comparable with corresponding
figures of previous year. Your Directors are optimistic that the Company's
performance will improve and also observe that the exceptional charge of
Rs. 238 crore in the Financial Statements for FY 2011 consequent to the
Workers Settlement in Thane has resulted in a Net Loss of Rs.100.19 crore.
In view of the good operating profits, your Directors propose to declare
dividend out of Reserves by following the Companies (Declaration of
Dividend out of Reserves) Rules 1975. Accordingly, an amount of Rs. 27.07
crore has been withdrawn from General Reserves. Out of the amount available
for appropriation, your Directors recommend a dividend of 10% aggregating
to Rs. 6.14 crore (Previous Year: Nil) on Equity Shares. The dividend tax
on the dividend recommended will be Rs.1.00 crore (Previous Year: Nil).

Your Company continues with its task to build business with long-term goals
based on its intrinsic strength in terms of its powerful brands, quality
manufacturing prowess, distribution strength and customer relationships.
Rationalising and streamlining operations to bring about efficiencies and
reducing costs will remain top priority.

3. OVERVIEW OF THE ECONOMY

Despite new risks, the global economic recovery is gaining strength and the
IMF has projected a 4.5% world growth in 2011 and 2012. While growth in
emerging economies remain strong, that in the US and European region is
slowly gaining momentum. Some of economies of the developed nations are
still a concern with the Euro zone being the most vulnerable as rating
agencies continue to downgrade the sovereign rating of many of economies in
this region. The natural disaster in Japan, sharp increase in oil prices
consequent to the turmoil in the Middle East and North Africa is fuelling
uncertainty to the pace of global recovery. Globally, elevated food and
commodity prices accompanied by the spike in oil prices have engendered
inflation concerns.

The Indian Economy registered improved growth and was amongst the better
performers amid emerging market economies. Central Statistical
Organization's recent estimated Indian GDP growth rate of 8.6% for 2010-11
is consistent with the RBI's projections for the same period. While the
area sown under the Rabi crop is higher than last year which augurs well
for agricultural production, the index of industrial production continues
to be volatile. The other indicators such as latest Purchasing Managers'
Index, direct and indirect tax collections, merchandise exports and bank
credit suggest that the growth momentum persists. However, continuing
uncertainty about energy and commodity prices may vitiate the investment
climate, posing a threat to the current growth trajectory. Inflation
remains a challenge for the Indian Economy and the key risks are tighter
monetary conditions and rising prices eating into the consumer's disposable
income.

4. ANALYSIS AND REVIEW

Textile Industry Conditions

The Textile industry is one of the largest and most important sectors in
the Indian economy in terms of output, foreign exchange earnings and
employment. India's Textile industry is one of the leading textile
industries in the world. It contributes approximately 14% to India's
industrial production, 4% to the GDP and 17% to the country's export
earnings. It provides direct employment to over 35 million people and is
the second largest provider of employment after the agricultural sector.
The industry is expected to grow steadily from its present US$ 70 billion
to US$ 110 billion by 2015. Textile products including wearing apparel have
registered a growth of 4.3% during April-January 2010-11, as per the Index
of Industrial Production (IIP) data released by the Central Statistical
Organisation.

Notwithstanding signs of recovery from the previous financial crisis, the
textile and apparel industry went through a tough year struggling with the
surging and fluctuating prices of raw materials. However, the Government is
making efforts in boosting the textile industry through various initiatives
and investments are increasing steadily. The Ministry of Textiles has
sanctioned a total of US$ 133 million under Technology Upgradation Fund
Schemes (TUFS) during September 2010. The industry is expected to continue
to grow at a significant rate in the future, as it is fuelled by a strong
domestic consumption.

Opportunities and Challenges

The present global economic scenario throws up opportunities for
fundamentally strong companies such as your Company. The inherent strength,
in the form of strong domain expertise, powerful brand positioning and
strength and resilience of the brands, fully integrated state-of-the-art
production facilities, cutting-edge technology and unparalleled product
innovation capabilities combined with the deep retail market penetration,
growth potential of the Tier 3, 4 and 5 towns; provide a highly potent
platform to seize opportunities in the form of newer markets, new segments
of customers, new channels of distribution, etc. On the other hand, value
buying by consumers, sharp increase in raw material prices, continued
weakness in developed geographies, prospect of higher domestic inflation,
fiscal tightening, proposed imposition of mandatory levy on branded
garments and interest rates are some of the challenges facing the Textile
Industry at large.

Overview

The Company is the market leader in the textiles sector in India, has a
powerful brand Raymond', state-of-the-art manufacturing facilities and a
strong all India retail presence in the form of The Raymond Shop' (TRS').
The Company is considered as the most respected company in the Apparel and
Textile sector of India. The Company is on the path to becoming a lifestyle
solution for discerning customers with an offering of a range of fabrics,
garments and accessories in a premium shopping environment. The Company
continues its growth of its retail network of TRS' in tier 3, 4 and 5
towns.

Performance Highlights

Robust demand conditions in the domestic market facilitated the Company to
improve its realisation by passing on the cost increase and improving the
product mix. The net sales for Textiles Division were Rs. 1485.43 crore
compared to Rs. 1222.93 crore in the previous year.

Market Share and Retail Network

The Company is the market leader in India and is considered as one of the
most formidable players in the global markets for high-quality suiting. The
Company continued its focus on retail segment expansion during this
financial year. In FY 2011 the Textiles Division's domestic sales were Rs.
1349.03 crore as against Rs.1089.29 crore in FY 2010. During FY 2011 the
Company opened 56 new retail stores. The Company continues to be judicious
in its selection of store locations.

Export

The Exports market condition were tough during the financial year because
of severe competition and continuous increase in the raw material prices
resulting in increase in the input costs. The Textile exports for the
financial year 2010- 2011 remained flat and were Rs. 136.40 crore as
against Rs. 133.64 crore in the previous year.

Raw Material

Wool prices have shown an upward trend in most of the months in the year
under review. The Australian Dollar has appreciated against the Indian
Rupee and has shown a rising trend over the last 6 months. The Polyester
Fibre prices also had an increasing trend during the year under review.

5. FINANCE AND ACCOUNTS

The observations made by the Auditors in their Report have been clarified
in the relevant notes forming part of the Accounts, which are self
explanatory.

6. PERFORMANCE OF SUBSIDIARY COMPANIES

Domestic

Raymond Apparel Limited

Members will recall that in order to optimize operational efficiencies,
rationalize cost, enhance synergies of Branded Apparel Business, etc., the
erstwhile Raymond Apparel Limited was amalgamated with another subsidiary
company namely; Solitaire Fashions Limited and the Scheme of Amalgamation
and Arrangement was sanctioned by the Hon'ble High Court of Judicature at
Madras and by the Hon'ble High Court of Judicature at Bombay. As part of
the Scheme approved by the Hon'ble High Courts and after following the
legal process stipulated under Section 21 of the Companies Act, 1956 the
name of Solitaire Fashions Limited was changed to Raymond Apparel Limited.

FY 2011 witnessed improvement in customer sentiments with marginal increase
in foot-falls. Consequently, the performance of this company was better
than the previous year. The gross turnover for the FY 2011 was Rs. 468.79
crore (Previous Year: Rs. 406.29 crore) while the Net Profit after tax was
Rs. 22.64 crore (Previous Year: 34.49 crore). This company has taken many
initiatives to consolidate its market leadership, improve profitability,
product innovation, appropriate product-price mix and operating
efficiencies with a special focus in retail.

Colorplus Fashions Limited

The Company's gross turnover for the year ended March 2011 was Rs. 172.00
crore (Previous Year: Rs. 154.28 crore). The Company had a profit after tax
of Rs. 10.38 crore (previous year loss : Rs. 3.40 crore). This Company
continues its initiatives at innovation and is a leading player in the
premium casual wear segment.

Silver Spark Apparel Limited

The gross turnover of the Company was Rs. 109.36 crore as compared to the
previous year Rs. 83.49 crore. The Company had a Profit after Tax of Rs.
5.62 crore (Previous Year: Rs. 3.06 crore). Celebrations Apparel Limited

The gross turnover of the Company was Rs. 17.17 crore (Previous Year: Rs.
17.42 crore). The Company earned a profit after tax of Rs.0.85 crore
(Previous Year Rs. 2.09 crore).

Everblue Apparel Limited

The Company earned a Profit after Tax of Rs.0.82 crore (Previous Year: Rs.
2.15 crore).

Raymond Woollen Outerwear Limited

The gross turnover of the Company, net of returns and discounts was Rs.
50.58 crore (Previous Year: Rs. 46.17 crore). The Company incurred a loss
before prior period adjustment of Rs. 4.32 crore (Previous Year: loss Rs.
1.44 crore). Your Company is in the process of seeking necessary legal
approvals from members / others for the amalgamation of this company. This
legal process is expected to help improve the capacity of your Company and
enhance operational efficiencies.

JK Files (India) Limited

The Company is engaged in manufacturing and marketing of Steel Files. With
acquisition of Files & Tools Division of Raymond Ltd., in the previous
financial year, this Company added to its portfolio of products to the
established business of High Precision Files, HSS Cutting Tools, Power
Tools and Hand Tools.

The Company continues to be the market leader in the files segment in the
domestic market and the largest producer of Steel

Files in the world.

The Export sales of the Company was Rs.100.10 crore compared to Rs.45.72
crore in the corresponding previous year. The Company reported gross
turnover of Rs. 272.12 crore for the year under review (Previous Year:
Rs.138.66 crore). The profit after tax was Rs.10.91 crore (Previous Year :
Rs.4.58 crore). The significant growth during the year is also seen on
account of acquisition of Files & Tools business of Raymond Ltd., during
second half of previous year. In spite of spiraling inflationary trends and
volatile foreign currency, the Company was able to put up a significantly
good performance during the year under review. The initiatives taken to
improve on time in full (OTIF), customer service, control on cost,
productivity, process and control over rejections, effective implementation
of Theory of Constraints model, optimizing working capital and aggressive
marketing are the factors which have helped the Company to register good
performance for the year under review.

The Company has taken conscious efforts towards better environment and
safety at all its manufacturing facilities. This company's all
manufacturing units now have BS OHSAS 18001:2007 and ISO 14001: 2004
certification.

JK Talabot Limited

The Company manufactures Files and Rasps at its plant located in Chiplun,
Ratnagiri District, in the state of Maharashtra. During the year, gross
turnover of the Company was at Rs.21.62 crore (Previous Year: Rs. 17.44
crore). The Company recorded Profit after Tax of Rs.1.43 crore (Previous
Year: Rs.0.83 crore) during the FY 2011.

The performance of the Company during the year was good, as it continued
its initiative on improvement in productivity, quality, and control on
costs, working capital, and better capacity utilization through effective
implementation of Theory of Constraints model.

Scissors Engineering Products Limited

The Company incurred a loss of Rs.43,666 (Previous Year: loss of Rs.34,631)
during the year under review.

Ring Plus Aqua Limited

The gross turnover of the Company was at Rs. 116.55 crore (Previous Year:
Rs. 81.74 crore). Profit after Tax was at Rs. 11.29 crore (Previous Year:
Rs. 5.08 crore). With significant growth trend in the Auto Industry, the
Company crossed the milestone of gross sales turnover of Rs.100 crore
during the year under review. The Gear sales showed significant growth
during the year under review and were higher by 58% at Rs. 73.21 crore as
compared to Rs. 46.30 crore in the previous year. The export sales have
doubled and domestic sales have recorded good growth of around 22% compared
to previous year. With growing demand, the Company has decided to augment
its capacity by 1.5 million gears during the year under review, to take
total Ring Gear capacity to 4.5 million per annum. The capacity expansion
is progressing as per schedule and is expected to be complete by September
2011.

The sales for Bearing Division were marginally higher at Rs. 26.55 crore as
compared to the previous year when it was Rs. 25.73 crore. USA continued to
be the major market for Bearing exports.

Pashmina Holdings Limited

The Company made a profit after tax of Rs 1.99 crore in the FY 2011 as
compared to a loss of Rs.0.05 crore in the previous year.

Overseas Companies

Jaykayorg AG recorded a profit of CHF 240,318 (equivalent to Rs.1.15 crore)
[Previous Year: loss CHF 743,667 (equivalent to Rs.3.34 crore)] for the
year ended December 31, 2010.

Raymond (Europe) Limited recorded a profit of Pound Sterling 19,474
(equivalent to Rs.0.14 crore) [Previous Year: loss Pound Sterling 111,804
(equivalent to Rs.0.84 crore)] for the year ended December 31, 2010. R & A
Logistics INC, USA, a subsidiary of Ring Plus Aqua Limited set up in USA to
provide better service to US based customers, earned a profit of US$ 11,111
(equivalent to Rs. 0.04 crore) [Previous Year: profit US$ 7,239 (equivalent
to Rs.0.03 crore)] for the year ended March 31, 2011.

7. PERFORMANCE OF JOINT VENTURES

Raymond UCO Denim Private Limited

During the year under review, the sales turnover of Indian operations, net
of returns and discounts recorded a 28% growth to Rs. 596.06 crore
including exports of Rs.263.44 crore, as compared to Rs. 466.30 crore
including exports of Rs. 226.92 crore for the previous year ended March 31,
2010.

The Company recorded a profit before tax and exceptional items of Rs.6.18
crore as against a loss of Rs 4.27 crore in the previous year ended March
31, 2010. During the year, Rs. 48.54 crore was invested in its subsidiary
from the proceeds of the equity capital subscribed by both the
shareholders. The subsidiary has used these funds for repaying its
obligations to the European Banks and consequently thecorporate guarantee
stands discharged. A provision of Rs. 20 crore has been made towards
diminution in the value of investment in the books of this Company made in
its subsidiary. The previous year had an exceptional gain of Rs. 7.23 crore
arising from write back of interest provided on loans and debentures
subscribed by one of the shareholders of the Company.

Raymond Zambaiti Limited

The gross turnover of the Company was Rs. 211.76 crore (Previous Year: Rs.
163.20 crore). The Company had a Profit after Tax of Rs. 7.51 crore
(Previous Year: Rs. 11.12 crore) during the year ended March 2011. During
the year under review, steep increase in cotton prices has impacted the
profitability of the Company. This Company is the preferred premium high
value shirting supplier to leading domestic brands and has a strong
emphasis on quality and innovation.

8. QUALITY & ACCOLADES

Your Company continues to win awards year-on-year. Some notable awards
during the year are:

- The Chhindwara unit of the Company won The National Safety Award under
Scheme-II and runner up in Scheme-I for the performance year 2008.

- The Vapi Textile Unit has been certified OHSAS 18001:2007 and declared as
ISO 14001:2004.

- The Vapi Textile Unit won the 2nd Prize and Jalgaon Textile Unit was
awarded Certificate of Merit in Energy Conservation at

The National Energy Conservation Awards in the Textile sector on December
14, 2010.

- The Company has recently been adjudged as India's Most Respected Company
in the Textile and Apparel sector by Business World.

- The Company bagged the most prestigious award as The Franchisor of the
Year' at the Franchise and Star Retailer Awards' organized by Franchise
India.

- The Company has been awarded the SAP Customer Centre of Expertise (CCOE)
certification for its SAP operations on November 3, 2010.

- J.K. Files (India) Limited has won for the 4th consecutive year EEPC
India Star Performer Award year 2008-09, for the highest engineering
exports in Hand Tools (Large Enterprise).

9. CONSOLIDATED ACCOUNTS

In accordance with the requirements of Accounting Standard AS-21 prescribed
by The Institute of Chartered Accountants of India, the Consolidated
Accounts of the Company and its Subsidiaries (including the Joint Ventures)
is annexed to this Report. The Gross Consolidated Turnover for the year FY
2011 was Rs.3035.91 crore (Previous Year : Rs.2507.83 crore). The
Consolidated Profit before Tax before exceptional items was Rs.198.92 crore
(Previous Year: Rs.43.19 crore). The Consolidated Profit after tax for the
year was Rs.38.04 crore (Previous Year Loss : Rs.50.15 crore).

10. CORPORATE GOVERNANCE

Your Company continues to be committed to good Corporate Governance aligned
with good practices. Your Company is in compliance with the standards set
out by Clause 49 of the Listing Agreement with the Stock Exchanges.

A separate Report on Corporate Governance along with the Auditors'
certificate on compliance with the Corporate Governance as stipulated in
Clause 49 is set out in this Annual Report and forms part of this Report.

11. DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the
Company's Articles of Association, Shri Nabankur Gupta and Shri Shailesh V.
Haribhakti, Directors, retire by rotation at the forthcoming Annual General
Meeting and, being eligible offer themselves for re-appointment.

Shri Akshay Chudasama and Shri Boman R. Irani, Independent Directors were
appointed as Additional Directors of the Company with effect from April 21,
2011. In terms of Section 260 of the Companies Act, 1956, both Shri
Chudasama and Shri Irani hold office only upto the date of the ensuing
Annual General Meeting. The Company has received requisite notice in
writing from members proposing their respective names for the office of
Director liable to retire by rotation.

12. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956,
the Board of Directors of the Company hereby state and confirm that:

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

(ii) the Directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at March 31, 2011 and of the loss of the Company for the year
ended on that date;

(iii) the Directors have 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) the Directors have prepared the annual accounts on a going concern
basis.

13. AUDIT

Messrs. Dalal & Shah, Chartered Accountants, who are Statutory Auditors of
the Company hold office up to the forthcoming Annual General Meeting and
are recommended for re-appointment to audit the accounts of the Company for
the Financial Year 2011-12. As required under the provisions of the Section
224 (1B) of the Companies Act, 1956, the Company has obtained written
confirmation from Messrs. Dalal & Shah that their appointment if made would
be in conformity with the limits specified in the Section.

As per the requirement of Central Government and pursuant to Section 233B
of the Companies Act, 1956, your Company carries out an audit of cost
records relating to Textile Division every year. Subject to the approval of
the Central Government, the Company has appointed Messrs. R. Nanabhoy &
Co., Cost Accountants, as Cost Auditors to audit the cost accounts of the
Company for the Financial Year 2011-12. The cost audit report for the
Financial year 2009 - 2010 which was due to be filed with the Ministry of
Corporate Affairs on September 30, 2010 was filed on August 12, 2010.

14. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company believes in formulating adequate and effective internal
control systems and implementing the same strictly 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 systems is improved and modified continuously to meet the changes
in business conditions, statutory and accounting requirements. The Audit
Committee of the Board of Directors, Statutory Auditors and the Business
Heads are periodically apprised of the internal audit findings and
corrective actions taken.

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 robust Management Information System
which is an integral part of the control mechanism.

15. RISK MANAGEMENT

The Company is exposed to risks from market fluctuations of foreign
exchange, interest rates, commodity prices, business risk, compliance risks
and people risks.

Foreign Exchange Risk

The Company's policy is to actively manage its long term foreign exchange
risk within the framework laid down by the Company's forex policy.

Interest Rate Risk

Given the interest rate fluctuations, the Company has adopted a prudent and
conservative risk mitigating strategy to minimise the interest costs.

Commodity Price Risk

The Company is exposed to the risk of price fluctuation on raw materials as
well as finished goods in all its products. The Company proactively manages
these risks in inputs through forward booking, inventory management,
proactive management of vendor development and relationships. The Company's
strong reputation for quality, product differentiation and service, the
existence of a powerful brand image and a robust marketing network
mitigates the impact of price risk on finished goods.

Risk Element in Individual Businesses

Apart from the risks on account of interest rate, foreign exchange and
regulatory changes, various businesses of the Company are exposed to
certain operating business risks, which are managed by regular monitoring
and corrective actions.

Compliance Risks

The Company is exposed to risks attached to various statutes and
regulations including the Competition Act. The Company is mitigating these
risks through regular reviews of legal compliances, through internal as
well as external compliance audits.

People Risks

Retaining the existing talent pool and attracting new manpower are major
risks. The Company has initiated various measures such as rollout of
strategic talent management system, training and integration of learning
activities. The Company has also established Raymond Leadership Academy',
which helps to identify, nurture and groom managerial talent within the
Raymond Group to prepare them as future business leaders.

16. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has an innate desire and zeal to contribute towards the welfare
and social upliftment of the community. The Company continues to support
the following CSR initiatives:

- Smt. Sulochanadevi Singhania School at Thane, Maharashtra and the
Kailashpat Singhania High School in Chhindwara, M.P., having overall
strength of around 7400 students, provide quality education not only to the
Raymond employees' children, but also to the children of the local
populace;

- Raymond Embryo Research Centre for cattle is a centre set up at
Gopalnagar, Bilaspur in Chhattisgarh and its ceaseless efforts and
endeavours have made several significant achievements in Embryo Transfer.
Raymond was the first organisation in India to introduce Embryo Transfer in
Sheep;

- J. K. Trust Gram Vikas Yojana (JKTGVY) launched in 1997 helps transfer of
the technical expertise gained over three decades to the grass-root level.
The mission of this initiative is to significantly improve the quality of
life in India's rural areas through a 'Cattle Breed Improvement Programme'.
This initiative operates in a network of over 4000 Integrated Livestock
Development Centre in Chhattisgarh, Madhya Pradesh, Uttarakhand and Andhra
Pradesh; and

- Raymond Rehabilitation Centre has been set-up for the welfare of under-
privileged children at Jekegram, Thane. This initiative enables less
fortunate children to be self-sufficient in life. The Centre provides free
vocational training workshops to young boys over the age of 16. The three-
month vocational courses comprise of basic training in electrical, air-
conditioning & refrigeration, plumbing etc.

17. ENVIRONMENT AND SAFETY

The Company is conscious of the importance of environmentally clean and
safe operations. The Company's policy requires the conduct of all
operations in such manner so as to ensure safety of all concerned,
compliance of statutory and industrial requirements for environment
protection and conservation of natural resources to the extent possible.

18. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company takes pride in the commitment, competence and dedication shown
by its employees in all areas of business. Various HR initiatives are taken
to align the HR Policies to the growing requirements of the business. The
Company has a structured induction process at all locations and management
development programmes to upgrade skills of managers. Objective appraisal
systems based on Key Result Areas (KRAs) are in place for senior management
staff. Technical and safety training programmes are given periodically to
workers. Industrial relations remained generally cordial.

19. STATUTORY INFORMATION

Information pursuant to sub-section 1 (e) of Section 217 of the Companies
Act, 1956, read with the Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 is given in Annexure - 1 to this
Report.

During the FY 2011, 13 employees employed throughout the year, were in
receipt of remuneration of Rs.60 lakh per annum or more amounting to
Rs.1474.28 lakh and 27 employees employed for part of the FY 2011 were in
receipt of remuneration of Rs.5 lakh per month or more amounting to
Rs.540.50 lakh. The information required under Section 217 (2A) of the
Companies Act, 1956 read with Companies (Particulars of Employees) Rules,
1975 and forming part of the Directors' Report for the year ended March 31,
2011 is given in Annexure - 2 to this report. None of the employees listed
in the said Annexure is a relative of any Director of the Company. None of
the employees hold (by himself or along with his spouse and dependent
children) more than two percent of the equity shares of the Company. As per
Section 212 of the Companies Act, 1956, the Company is required to attach
the Directors' Report, Balance Sheet, and Profit and Loss account of
subsidiaries. The Central Government has granted general exemption from
complying with Section 212 of the Companies Act, 1956 to all companies vide
Notification No. 5/12/2007-CL-III dated February 8, 2011. Accordingly, your
Company has presented in this Report, the consolidated financial statements
of the holding company and all its subsidiaries, duly audited by the
Statutory Auditors. The Company has also disclosed in the Consolidated
Balance Sheet the information required to be provided as per the aforesaid
notification dated February 8, 2011. The Company will make available the
audited annual accounts and related information of its subsidiaries, upon
request by any of its shareholders. The annual accounts of the subsidiary
companies will also be kept for inspection, by any member at the Registered
Offices of the Company and its subsidiary companies.

The Company has not accepted any deposits, within the meaning of Section
58-A of the Companies Act, 1956 read with the Companies (Acceptance of
Deposits) Rules, 1975 made thereunder. The unclaimed Fixed deposits
amounting to Rs. 95,000/- as on March 31, 2010, was transferred to Investor
Education and Protection Fund during the year under review.

20. CAUTIONARY STATEMENT

Statement in this Directors' Report & Management Discussion and Analysis
describing the Company's objectives, projections, estimates, expectations
or predictions may be 'forward-looking statements' within the meaning of
applicable securities laws and regulations. Actual results could differ
materially from those expressed or implied. Important factors that could
make a difference to the Company's operations include raw material
availability and prices, cyclical demand and pricing in the Company's
principal markets, changes in Government regulations, tax regimes, economic
developments within India and the countries in which the Company conducts
business and other incidental factors.

21. APPRECIATION

Your Directors wish to place on record their appreciation for the
contribution made by employees at all levels but for whose hard work,
solidarity, and support your Company's achievements would not have been
possible. Your Directors also wish to thank the customers, dealers, agents,
suppliers, joint venture partners, investors and bankers for their
continued support and faith reposed in the Company. The Company also thanks
the Central Government, the concerned State Governments and other
Government Authorities for their support and co-operation.

For and on behalf of the Board

Gautam Hari Singhania
Chairman and Managing Director

Mumbai, April 21, 2011.

Annexure - 1 to the Directors' Report

Information pursuant to Section 217(1)(e) of the Companies Act, 1956, read
with Companies ( Disclosures of Particulars in the Report of Board of
Directors) Rules, 1988.

A. Conservation of Energy:

Energy conservation continued to have high prominence as in previous years.

Some of the initiatives taken in the 2010-11 were as follows:

In Textiles Division

At Chhindwara Unit:

1) Conversion from DC to AC drive in Benninger Warping machine.

2) Installation of Variable Frequency drives on TFO machines.

3) Installation of new energy saving machines in Dyeing section.

4) Installation of energy efficient light fittings.

At Jalgaon Unit:

1) Installation of energy efficient light fittings.

2) Installation of VFDs for air conditioning plant blowers & pumps.

3) Optimum utilization of Air compressors by means of compressed air
pressure booster unit.

At Vapi Unit:

1) Installation of Inverter at Air washer tower.

2) Installation of Timer Switches for Warehouse storage area illumination.

B. Technology Absorption:

(a) Research and Development (R&D)

Textiles Division

The R&D Department of Textiles Division strives to develop and provide
exclusive and innovative products under its brand.

Some of the products developed and introduced during the year under review
were:

1) BRADFORD Jacketing - A collection of reversible Jacketing fabric.

2) TERINO - A new generation fabric made from an innovative soft viscose
blend with lustrous finish that keeps garment fresh even after repetitive
washes.

3) CLASSIC KHAKI - A trend setting range in various fibre blends in the
color of fashion.

4) COTTON LUSTER - Softness of cotton with elegant sheen in unique yarn
dyed designs.

The details of expenditure on Research and Development is given in this
Report. The Company has incurred an expenditure of

Rs.24.29 Lakh towards Research and Development which is 0.02 per cent of
the total turnover of the Company for the FY 2011.

(b) Technology Absorption, Adaptation and Innovation

Textiles Division

The Textiles Division undertook the following measures towards Technology
Absorption, Adaptation and Innovation:

1) Implementation of BARCO Optispin system in spinning department for
online monitoring of Production parameters and report generation.

2) Implementation of Automatic Humidification system for on line
monitoring, control and report generation.

3) Installation of Condensate Heat recovery pumps at various locations.

4) Implementation of Nature Switch in Street lights for switching on the
lights automatically when it is dark.

5) Quick style change in weaving department to reduce the Beam gaiting
time.

C. Foreign Exchange Earnings and Outgo:

Textiles Division recorded an increase of 3% in exports, in comparison with
the previous year, to Rs. 92.02 crore. This has been achieved through
focused effort on enhancing customer base and providing value added
products.

Form A'

[Forming part of Annexure - 1]

DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

A. POWER AND FUEL CONSUMPTION

Purchased Own generation
(through Diesel
Generator/Steam
Turbine)
Current Previous Current Previous
Year Year Year Year

1. Electricity

a) Total units (KWH
in thousands)

Textiles * 62352 68512 63873 67145

b) Total Amount
(Rupees in lacs)

Textiles 3382 3762 2368 2462

c) Units/per Liter
of Diesel Oil

Textiles - - 3.37 3.44

d) Units/per Kg.
of Coal

Textiles - - 0.77 0.78

e) Units/per
Cubic mtr of Gas

Textiles - - 3.20 3.46

f) Cost per
unit (Rs.)

Textiles 5.42 5.49 3.71 3.67

*633.09 lac KWH units generated through steam turbine (Previous year 605.71
lac KWH units)

Total Total Cost Average Rate
Quantity Rs. Lacs per Unit (Rs.)

2. Coal (M.T.)

a) Textiles Division**

Current Year 89911 2198 2444

Previous Year 85126 1804 2119

3. Furnace Oil
(Lac Liters)

a) Textiles Division

Current Year 0.35 12 35.08

Previous Year 26.24 686 26.14

4. Diesel Oil
(Lac Liters)

a) Textiles Division

Current Year 2 71 41.90

Previous Year 5 184 36.55

5. LPG (Kgs.)

a) Textiles Division

Current Year 48298 21 43.04

Previous Year 71737 29 40.56

6. Natural Gas
(Lacs Cubic Mtr.)

a) Textiles Division

Current Year 76 1498 19.65

Previous Year 77 1263 16.43

**80889 MT used for CPP (Previous year 77481 MT)

B. CONSUMPTION PER UNIT OF PRODUCTION

Unit Standard (if any) Current Year Previous Year

Electricity

Fabrics KWH/Metre - 3.93 4.88