1. FINANCIAL RESULTS

                                            (Rs. In crores)

                                      2011-12    2010-11

Net Profit for the year before 
exceptional items                        1.29       3.08

Exceptional items                           -      69.94

2. OPERATIONS

During the financial year, the Company has achieved a turnover of about Rs. 167 crores as against Rs. 143 crores during the previous financial year. With the entry of new manufacturers and additions to the capacities by all the major producers of denim in the country, there has been surplus in the market with the average realizations declined during the year under review. Company is facing acute shortage of working capital which has impacted profitability of the Company for the year. Production cost pushed up due to exorbitant increase in power and other input cost. Inspite of difficult business conditions prevailing in the domestic textile market and continued recessionary trend prevailing in global textile markets, your Company has been able to generate net profit of about Rs. 1.29 crores as against net profit of Rs. 3.08 crores in previous year. The exports of Denim are not remunerative due to world wide competition in the global market of Denim Industry, flooding of cheaper denim fabric by China, East Asian Countries & Pakistan. However, the Company is continuing its efforts to explore opportunities for its products in overseas markets and could export the Denim Fabrics of about Rs. 2 crores during the year under review. Your Company has also taken several remedial steps to meet the challenges viz. measures of saving in cost at all fronts of operation, optimize use of available resource etc. Your Directors regret their inability to recommend any dividend for year under review in absence of net profits.

3. FUTURE PROSPECTS

Since last few years the Denim Industry is passing through difficult business conditions. Due to change in fashion the demand of denim fabric has declined world over resulting into over supply situation. Over supply situation coupled with lower demand have squeezed the margins not only of your Company but almost of every leading houses in denim segment of textiles. The substantial increase in the number of players in denim sector is a cause of worry and may lead to further glut in the market. Domestic demand is expected to grow at 20-25% whereas supply growth is expected to be in excess of 50%. The long term success is possible only when the product mix is diversified. However such diversification will need large investment which is not possible for your Company as we have shortage of funds. Thus prospects of Denim industry remains uncertain.

4. RESTRUCTURING OF DEBTS & REFERENCE TO BIFR

The company is making continuous efforts for settlement of dues of the secured lenders. Once settlement with the remaining secured lenders are completed, company will file fully tied up Draft Rehabilitation Scheme with Operating Agency & Hon'ble BIFR.

5. PUBLIC FIXED DEPOSIT

In view of petition filed by the Company, the Hon'ble Company Law Board has passed an order on 21/12/2001 that "The repayment of fixed deposits shall be made by the Company in accordance with "revival scheme" as and when approved by BIFR under the provision of SICA". However payments on compassionate ground are continued to be made as per the decision of the committee formed by Hon'ble Company Law Board for this purpose.

6. DIRECTORS

Shri RR. Maheshwari is liable to retire by rotation and being eligible, offers himself for re-appointment. Appropriate resolution for the re-appointment of the aforesaid Director is being moved at the ensuing Annual General Meeting, which the Board recommends for your approval.

7. AUDITORS

M/s. J. T. Shah & Co., Chartered Accountants, Ahmedabad retires at the forthcoming Annual General Meeting. Your Directors recommend their re-appointment as Auditor of the Company for the year 2012-13. The observations made by the Auditors are self explanatory and have been dealt with in the notes forming part of the financial statements and hence need no further clarifications.

8. INDUSTRIAL RELATIONS & PARTICULARS OF EMPLOYEES

Your Directors sincerely appreciate the workers, staff and officers for putting in their best efforts. The Company has enjoyed healthy and cordial industrial relations throughout the year under review. There is no employee getting remuneration as prescribed under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended.

9. DIRECTOR'S 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 at the end of the financial year and of the profit or loss of the Company for the year under review;

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.

10. PARTICULARS OF ENERGY CONSERVATION. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO

The statement of particulars relating to energy conservation, technology absorption and foreign exchange earnings and outgo as required in accordance with Section 217 (1) (e) of the Companies Act, 1956 read with Rule 2 (A), 2(B) and 2 (C) of the Companies (Disclosures of particulars in the report of Board of Directors) Rules, 1988 is annexed hereto and forms part of this report.

11. CONSTITUTION OF AUDIT COMMITTEE

The Board of Directors has constituted the Audit Committee of Directors to exercise powers and discharge functions as stipulated in section 292A of the Companies Act, 1956. The present Audit Committee consists of member directors as follows:-

Shri H. L. Sharma, Chairman

Shri B. L. Verma

Shri R.R. Maheshwari (From 22nd March, 2012)

12. ACKNOWLEDGEMENTS

The Board places on record its sincere thanks and gratitude for the assistance and continued co-operation that the Company has been receiving from the financial institutions, banks, employees, shareholders and Central as well as State Government.

                                              ON BEHALF OF THE BOARD

                                                      (SACHIN RANKA)
                                        Chairman & Managing Director