Dear Members,

The Directors have pleasure in presenting the 34^th Annual Report and the Audited Statements of Accounts of your Company for the financial year ended 31^st March, 2016.

FINANCIAL RESULTS:- (Rs. in Lacs)

Note: Previous year figures have been regrouped / rearranged wherever necessary DIVIDEND:-

In view of huge losses, your Directors are unable to recommend any dividend on the equity shares for the year under review.

REVIEW OF OPERATIONS:-

During the year, the Income from operations of Company has substantially decreased to Rs. 23346.93 Lacs against Rs. 89530.04 Lacs in respect of the previous Financial Year ended 31^st March, 2015. The Company has incurred loss before exceptional and extra ordinary items and tax of Rs. 10381.46 Lacs as against loss of Rs. 26388.94 Lacs in the previous financial year ended 31^st March, 2015. The Company has incurred during the year Net Loss of Rs. 10633.82 Lacs as against Net Loss of Rs. 26679.70 Lacs in the previous financial year ended 31^st March, 2015.

The company experienced that the efficiency of plant and machineries, especially Spinning Machines have gone down and set up an in house Expert Group to suggest measures for Technology up gradation and Modernization. As per their recommendations, old machines including Ring Frames, requiring expenditure towards repairs and maintenance consuming high power with low output have been identified and shifted to workshop/godowns for appropriate action.

BIFR:-

The Company is a Sick Industrial Company, pursuant to section 3(1) (o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and is registered with Board for Industrial and Financial Reconstruction (BIFR). The proceedings are pending in this matter.

SUBSIDIARY COMPANY:-

The Company has 2 subsidiaries as on March 31, 2016. There are no associate companies or joint venture companies within the meaning of section 2(6) of the Companies Act, 2013 (“the Act”). There has been no material change in the nature of the business of the subsidiaries.

Pursuant to the provisions of Section 129(3) of the Act read with Rule 5 of The Companies (Accounts) Rules, 2014, the statement containing salient feature of the financial statement of a company's subsidiary or subsidiaries, associate company or companies and joint venture or ventures under the first proviso to subsection (3) of section 129 (in Form AOC-1 - Annexure - A) is attached to the financial statements of the Company.

Further, pursuant to the provisions of section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.

Members who wish to receive the full Report and Accounts including the Report and Accounts of the Subsidiary Companies will be provided with it upon receipt of a written request. This will help save considerable cost in connection with printing and mailing of the Report and Accounts.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:-

Pursuant to the provisions of Section 161(1) and 149(1) of the Act read with Rule 3 of The Companies (Appointment and Qualifications of Directors) Rules, 2014 and the Articles of Association of the Company, Mrs. Manasi Wadkar was appointed as an Additional Director w.e.f. 7^th November, 2015 and she shall hold office up to the date of the ensuing Annual General Meeting. The Company has received requisite notice in writing from a member proposing Mrs. Manasi Wadkar for appointment as a Director.

Mrs. Neha Patil retires by rotation and being eligible has offered herself for re-appointment.

The Independent Directors of the Company have declared that they meet the criteria of independence as laid down in Section 149(6) of Act and Clause 49 of the Listing Agreement and SEBI Listing Regulations. In the opinion of the Board they fulfill the conditions of Independence as specified in the Act and Rules made there under and are independent of the management.

In accordance with the Section 203 of the Companies Act, 2013, Ms. Aarti Inderjit Sharma has been appointed as whole-time Company Secretary and Compliance Officer of the Company w.e.f. 25^th May, 2016.

Mr. Pushpendra Pratap Singh has resigned on 1^st November, 2015 as whole-time Company Secretary and Compliance Officer of the Company.

AUDIT COMMITTEE:-

The composition of Audit Committee is as given in the Report on Corporate Governance.

STAKEHOLDER RELATIONSHIP COMMITTEE:-

The composition of Stakeholder Relationship Committee is as given in the Report on Corporate Governance.

REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:-

Pursuant to SEBI Listing Regulations, a Management Discussion and Analysis Report and a Corporate Governance Report are made as a part of this Annual Report.

The Certificates from M/s. A. F. Khasgiwala & Co., Practicing Chartered Accountants and Shri Manoj Kumar Sharma, Managing Director regarding Compliance of the conditions of Corporate Governance as stipulated by SEBI Listing Regulations is attached to this report.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS:-

The Company familiarizes its Independent Directors with the Company, their roles, rights, responsibilities in the company, nature of the industry in which the company operates, business model of the company etc. through various programmers.

The details of such familiarization programme shall be disclosed on the Company's website.

DECLARATION OF INDEPENDENT DIRECTORS:-

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:-

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman & Managing Director. The Internal Audit Department monitors and evaluates the efficiency and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

CODE OF CONDUCT:-

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Company believes in “Zero Tolerance” against bribery, corruption and unethical dealings / behaviours of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as “code of business conduct” which forms an Appendix to the Code. The Code has been posted on the Company's website. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance through examples on the expected behaviour from an employee in a given situation and the reporting structure. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard.

EXTRACT OF ANNUAL RETURN:-

As provided under section 92(3) of the Act, the extract of Annual Return in Form MGT-9 as on 31^st March, 2016 is attached as Annexure-E to this report.

BOARD MEETINGS HELD DURING THE YEAR:-

During the year, 4 meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report which is attached to this report.

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 that:

a. in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made 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, 2016 and of the profit of the Company for the year ended on that date;

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

d. the annual financial statements have been prepared on a going concern basis;

e. proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f. systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

PARTICULARS OF LOANS, GURANTEES OR INVESTMENTS UNDER SECTION 186 OF THE ACT:-

Details of loans, guarantees and investments covered under the provisions of section 186 of the Act are given in the Notes to financial statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:-

None of the transactions with related parties falls under the scope of section 188 (1) of the Act. Information on transactions with related parties pursuant to section 134(3) (h) of the Act read with rule 8 (2) of the Companies (Accounts) Rules, 2014 , in the prescribed Form AOC-2, is appended as Annexure B to the Board's report.

The Board has approved the policy on Related Party Transactions and Material Subsidiary. The policies have been uploaded on the Company's website, under the web link:http:// kslindustries.org /wp/related-party-transactions/

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:-

The Directors are happy to state that the relations between the Company and its Employee remained cordial throughout the year. The Directors acknowledge and express their appreciation for the contributions made by the employees at all levels. Focused attention was given for knowledge updating and application of new technologies available to reduce costs and to meet the business challenges.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, none of the employees drew remuneration of Rs. 60,00,000/- or more per annum/ Rs. 5,00,000/- or more per month during the year or drew remuneration in excess of the remuneration drawn by Managing Director or Whole-time Directors and does not hold either by himself or through his spouse or dependent children 2 per cent or more equity shares of the company. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure -C forming a part of Annual Report.

In terms of the provisions of Section 136(1) read with its relevant proviso of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.

DETAILS OF SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS / COURTS / TRIBUNAL IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATION IN FUTURE:-

There are no significant material orders passed by the Regulators / Courts / Tribunal which would impact the going concern status of the Company and its future operations. Hence, disclosure pursuant to Rule 8 (5) (vii) of Companies (Accounts) Rules, 2014 is not required.

RELATED PARTY TRANSACTIONS:-

All transactions entered by the Company with Related Parties were in Ordinary Course of Business and at Arm's Length pricing basis. The Audit Committee granted omnibus approval for the transactions (which are repetitive in nature) and the same was reviewed by the Audit Committee and the Board of Directors.

There were no materially significant transactions with Related Parties during the financial year 2015-16 which were in conflict with the interest of the Company. Suitable disclosures as required under AS18 have been made in the Notes to financial statements.

The Board has approved the policy on Related Party Transactions and Material Subsidiary. The policies have been uploaded on the Company's website, under the web link:

http://kslindustries.org/wp/related-party-transactions/

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN 31ST MARCH, 2016 AND 12TH AUGUST, 2016 (DATE OF THE REPORT):-

There were no material changes and commitments affecting the financial position of the Company between the end of the financial year (31^st March, 2016) and the date of the Report (12^th August, 2016)

CONSERVATION OF ENERGY:-

a) Company ensures that the manufacturing operations are conducted in the manner whereby optimum utilization and maximum possible savings of energy is achieved.

b) No specific investment has been made in reduction in energy consumption.

c) As the impact of measures taken for conservation and optimum utilization of energy are not quantitative, its impact on cost cannot be stated accurately.

TECHNOLOGY ABSORPTION:-

Company's products are manufactured by using in-house know how and no outside technology is being used for manufacturing activities. Therefore no technology absorption is required. The Company constantly strives for maintenance and improvement in quality of its products and entire Research & Development activities are directed to achieve the aforesaid goal.

FOREIGN EXCHANGE EARNINGS AND OUT-GO:-

During the period under review there was no foreign exchange earnings or out flow.

RISK MANAGEMENT:-

Your Company has a robust Risk Management policy. The Company through its Steering Committee overseas the Risk Management process including Risk Identification, impact assessment, effective implementation of the plans and risk reporting.

Sustainability is embedded in the Corporate Enterprise Risk Management programme, which gives an opportunity to increase effectiveness of risk management practices and for improving business efficiency. The Company's social and environmental policies correlate strongly with the risk management strategy and ultimately the financial performance.

The details of the Risk Management as practiced by the Company are provided as part of Corporate Governance Report to this Report.

REMUNERATION POLICY OF THE COMPANY:-

The remuneration policy of the company comprising of the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters has been provided in the Corporate Governance Report which is attached to this Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:-

Pursuant to the Section 177(9) and 177(10) of the Companies Act, 2013 and Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of SEBI Listing Regulations, the Board of Directors have approved the Policy on Vigil Mechanism / Whistle Blower and the same has been hosted on the Website of the Company. This Policy inter alia provides a direct access to the Chairman of the Audit Committee.

Your Company hereby affirms that no Director / employee have been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.

PREVENTION OF INSIDER TRADING:-

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code.

ANNUAL EVALUATION BY THE BOARD OF DIRECTORS:-

Pursuant to the provisions of the Act and Regulation 19 read with Part D of Schedule II of SEBI Listing Regulations, the Nomination and Remuneration Committee has defined the evaluation criteria, procedure and time schedule for the Performance Evaluation process for the Board, its Committees and Director.

In accordance with the criteria and procedure the Independent Directors considered/evaluated the Board's performance, Performance of the Chairman and other Non-Independent Directors.

The Board has undergone a formal review which comprised Board effectiveness survey and review of materials. The Board subsequently evaluated its own performance, the working of its committees (Audit Committee, Nomination and Remuneration Committee, Stakeholder Relationship Committee and Management and Finance Committee) and Independent Directors (without the participation of the relevant director).

The Directors were evaluated on aspects such as attendance and contribution at Board / Committee Meetings and guidance/ support to the management outside Board/Committee Meetings. In addition, the Chairman was also evaluated on key aspects of his role, including the strategic agenda of the Board, encouraging active engagement by all Board members and motivating and providing guidance to the Managing Director and CFO Areas on which the Committees were assessed included degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.

The performance evaluation of Independent Directors was carried out by the entire Board, excluding the director being evaluated. The performance evaluation of the chairman and the Non-Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board as a whole. The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committee and of the Directors.

The Chairman of the Board provided feedback to the Directors on an individual basis, as appropriate. Significant highlights, learning and action points with respect to the evaluation were presented to the Board.

POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE:

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has not received any complaint of sexual harassment during the financial year 2015-16.

FIXED DEPOSITS:-

The Company has not invited/received any fixed deposits from the public during the year under Report.

INSURANCE:-

The properties, stock, assets of your Company are adequately insured.

AUDITORS Statutory Auditor:-

Pursuant to the provisions of section 139 of the Act and the rules framed thereafter, M/s. A. F. Khasgiwala & Co., Chartered Accountants, were appointed as Statutory Auditors of the Company from the conclusion of 32^nd annual general meeting (AGM) of the Company held on 19^th July, 2014 till the conclusion of the 35^th AGM to be held in the year 2017, subject to ratification of their appointment at every AGM.

The Company has received letter from of M/s. A. F. Khasgiwala & Co., Chartered Accountants, to the effect that their reappointment, if made, would be within the prescribed limits under Section 141(3) (g) of the Act and that they are not disqualified for re-appointment.

The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. Cost Auditor:-

As per the requirements of Central Government and pursuant to the provisions of Section 148 of the Companies Act, 2013, your Company carries out an audit of cost records every year.

Internal Auditor-

Pursuant to the provisions of Section 138 of the Companies Act, 2013, the Board of Directors of the Company had appointed Internal Auditor of the Company for the financial year 2015-16 and Company carries out an Internal Audit on quarterly basis.

Secretarial Auditor:-

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed Appurva Agarwal (M.No. 40352), a Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the year ended 31^st March, 2016. The Secretarial Audit Report is annexed as Annexure D.

AUDITORS' REPORT AND SECRETARIAL AUDITORS' REPORT:-

The Auditors' Report and the Secretarial Audit Report for the financial year ended 31^st March, 2016 do not contain any qualification, reservation, adverse remark or disclaimer.

DEPOSITS:-

During the year under review, your Company did not accept any deposits within the meaning of provisions of Section 73 to 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

SAFETY, HEALTH AND ENVIRONMENT:-

Sustained and meticulous efforts continue to be exercised by the Company at all plants of the Company, towards greener production and environment conservation. The Company perseveres in its efforts to indoctrinate safe and environmentally accountable behavior in every employee, as well as venders, by rigid compulsory annual training and refresher courses, as well as frequent awareness programmed. Mock drills of emergency preparedness are regularly conducted at all the plants showing Company's commitment towards safety, not only of its own men and plants, but also of the society at large.

Safety records, at the entire plants showed considerable improvement and accident statistics showed downward trend. This was made possible by strict adherence to laid down procedures and following of international guidelines. Involvement of workers in all safety matters has been encouraged by their participation in shop floor safety meetings.

The health of employees and the environment in and around the Plant area have been given due care and attention. The Company continued to comply with the prescribed industrial safety environment protection and pollution control regulation at its production plant, through periodic checks of the system involved and constant monitoring to meet the standards set by the pollution control authorities, etc.

All the mills of the Company are eco-friendly and do not generate any harmful effluents. They have facilities for captive power generation as a stand-by arrangement, to meet any contingency. Safety devices have been installed wherever necessary, although both the spinning and knitting activities are known to be quite safe and free from usual hazards of water and air pollution.

INDUSTRIAL RELATIONS & HUMAN RESOURCES MANAGEMENT:-

The Company is of firm belief that good Human Resource Management would ensure success though high performance. HR strategy and plans of the Company are deeply embedded with the organizational goals. In order to enhance the manpower productivity the goal is set to increase the production capacity of the various plants and rationalize the manpower through scientific study. All the operational goals of the top management emanate from the business plan. The goals of MD are shared with his subordinates who in turn share their goal with their respective subordinates and so on. Regular visits by HR team are being made to all the plants to meet the employees and also interaction meetings are conducted to get their feedback, based on which HR policies are improved continuously. The process has resulted in better employee relationship.

The Company lays due emphasis on all round development of its human resource. Hence training of the employees is aimed at systemic development of knowledge, skills, aptitude and team work. Training is designed for the development of personal skills necessary for the performance of the present job and to prepare them for future growth. Individual development is given top priority to groom high caliber manpower.

ACKNOWLEDGEMENT:-

Your Directors place on record their appreciation of the assistance and support extended by Bankers, Consultants, Solicitors, Shareholders and Employees of the Company.

For and Behalf of the Board of Directors

Sd/-

Manoj Kumar Sharma

Place: Mumbai Managing Director

Date: 12^th August, 2016 DIN: 01884806