Directors Report of Western India Cottons Ltd.

Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting their report and audited accounts for the financial year 2013-2014

(Rs. In lakhs)

2013-2014 2012-2013

Sales/Other Operating Income 396.81 388.68

Other Income 93.94 60.37

Gross Income 490.75 456.05

Profit before Tax 15.17 18.95

Provision for Taxation 4.21 - 4.73

Profit for the year 19.38 14.22

Add: Transfer to Capital ReserveRemission of Secured Loan 2.74

Add: Loss brought forward 2115.70 2129.92

Accumulated Loss as on 31st March 2099.06 2115.70

REVIEW OF OPERATIONS

Your Company could achieve a gross revenue of Rs.490.75 lakhs (Note no.:14&15 (456.05 lakhs), consisting of (i) Sales revenue of Rs.396.81 lakhs (388.68 lakhs), (ii) Rental income of Rs.65.97 lakhs (42.00 lakhs) and (iii) Miscellaneous income of Rs.27.97 lakhs (25.37 lakhs). (Figures in brackets for the previous year) After adjustment and taxation, your Company''s net profit this year stands at Rs. 19.38 lakhs against a profit of Rs. 14.22 lakhs for the previous year.

With regard to the trading segment, by concentrating on the essential aspects of sales, your company could maintain and slightly improve upon the sales revenue during the year compared to the previous year, which is an achievement considering the combination of adverse factors faced during the last year. Sales during the year suffered on account of long drawn strike in the textile sector in the grey fabric sourcing area in towns around Erode and Tirupur, which affected the availability of fabric for processing.. This was followed by high rise in grey fabric prices as a consequence of the labour settlement. Subsequently there was a long drawn disruption in processing, on account of Pollution Control Problems which lasted for two months, during which period no processing could be undertaken. Owing to such uncertainties, prices of grey fabric and charges for processing have been increasing more frequently than ever before. Unable to so frequently increase the prices of finished fabric to match the increase of grey fabric prices and processing charges, your company had to suffer on the profit margin. The suppliers do not give a firm commitment for either the prices or for the delivery period. As your Company has been maintaining minimum stock to reduce blocking of resource through inventory, there have been more frequent times during the year when supplies could not be ensured on demand, thus some orders were also lost.

In the past the Company had the benefit of some special orders demanding intricate specifications, which were executed through the inbuilt technological competence of the Company. The demand stands considerably reduced and no new sources could be traced. Also export of made- up items used to be a good source of income in the past, which during the year is nil. Despite all the adverse factors, your company has been able to make its presence felt in the market and the Company''s products which are mainly bleached mull of limited items are still in demand, though in comparatively small quantum, for its superior quality.

The other segment that came as a rescue and contributed to the increased revenue is income from rent which has increased from Rs.42 lakhs during the previous year to Rs.66 lakhs during the year. Considering the trend of lean trading activities, the immediate and apparently viable alternative appears to lay emphasis on generation of more income from godown renting. While your Company is making all out efforts in attracting more and more lessees, the buildings are knowingly more than seven decades old with wood and tile roof structure and do not offer modern facilities for warehousing. It is by taking advantage of the open space for movement and parking including for containers that attracted the present lessees. But the goods stored are mainly hardware items than modern items of white goods/electronics etc. Also the buildings before being rented out needs major repairs, alterations and modifications including partitions to provide minimum of storing and logistics conveniences involving considerable initial expenditure. The expenditure on repair of buildings before being rented out during the year comes to Rs.40 lakhs against a rent income of Rs.66 lakhs. Once the income from the rent is stabilized, demolition and reconstruction of some of the buildings would be taken up, for which survey and preliminary planning are afoot.

After the Processing Operator who was doing process operation in the mill premises discontinued their activities, the Mill had virtually no manufacturing activities. Your Company has located another party with whom a lease agreement has been entered into for them to conduct process operation in our Mill premises, so that manufacturing activities commences in the Mill premises.

Your Company is passing through a stage where the surplus generated through the limited activities of trading and renting help meeting the expenses related to a an ongoing Company like Stock Exchanges, Share Transfer Management, Factory License, Pollution Control Board Certification, Audit expenses and repair and maintenance of the buildings in the mill premises which carve a major portion of the rent income initially, apart from the normal business related expenses. Despite these factors your Company has been able to earn a net profit of Rs. 19.38 lakhs which is attributable to the strength of the Company derived through its reputation, credibility, quality orientation and business acumen. Your Company having discharged huge liabilities of Bank borrowings, VR compensation to the employees and other long pending major liabilities to the creditors, its strength lies on its non dependence on outside finance. With the present trend of trading business and rent income, there is definite scope for improved profitability in future.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY UPGRADATION AND FOREIGN EXCHANGE EARNINGS AND OUTGO.

The report required to be made pursuant to clause (e) of Section (1) in Section 217 of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of Board of Directors Rules 1988) and forming part of the Director''s report is given in Annexure A to this report.

DIRECTORS:

Retirement of Directors: As per the Companies Act 2013 and SEBI Guidelines the Company should appoint 2 Independent Directors for a period of 5 years. Accordingly Shri.R.S.Nair and Shri.A.Ramachandra Shetty are proposed to be appointed as Independent Directors. Brief particulars and expertise of these Directors and Committee membership have been given as Annexure to the notice of the Annual General Meeting. Shri.A.K.Shereif has to retire by rotation and is eligible for re-appointment. All the Directors have filed Form DDA with the Company as required under the Companies Act.

PERSONNEL:

There were no employees drawing remuneration in excess of the limits specified under section 2I7(2)(A) of the Companies Act during the year under report.

CORPORATE GOVERNANCE

Pursuant to clause 49 of the listing agreement with Stock Exchanges, Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of corporate governance have been incorporated in the Annual Report. Your company is committed to good corporate governance practices and to follow the guidelines provided by SEBI and stock exchanges from time to time.

DIRECTORS RESPONSIBILITY STATEMENT:

Your Directors hereby confirm:

1. That in the preparation of Accounts for the period ended 31st March 2014, applicable accounting standards have been followed along with proper explanation relating to material departures, wherever necessary.

2. That 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 for the financial year ended 31st March 2014.

3. That 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

4. That the Profit and Loss Account and Balance Sheet have been prepared on a going concern basis.

COMPLIANCE CERTIFICATE

As required under Section 383(A) of the Companies Act, Compliance Certificate obtained from Sri Murali Kanniyath, Practicing Company Secretary, Kannur, for the year ended 31st March 2014 is given in Annexure-B and forms part of this report.

AUDITORS:

M/S.T K Menon & Co., Chartered Accountants, Calicut the Statutory Auditors, retire at the ensuing Annual General Meeting and as per the provisions of the Companies Act 2013 they are eligible for re-appointment for a futher period of 3 years. Your Directors recommend the reappointment of the Statutory Auditors till the AGM of 2017. This is to be ratified at every Annual General Meeting till 2017.

INSURANCE:

The Company''s Assets have been adequately insured.

DIVIDEND

Though the Company has earned small amounts of operational profit during the years 2010- 2011, 2011-2012, 2012-2013 and 2013-2014 owing to accumulated losses of Rs.2099.06 lakhs as on 31st March 2014, no dividend could be declared under the Companies Act.

CORPORATE SOCIAL RESPONSIBILITY

Though your Company is not covered by Corporate Social Responsibility as per the Companies Act 2013, yet in its culture of being actively involved in Social responsibilities, emphasis will continue to be laid on this aspect.

ACKNOWLEDGEMENT

Your Directors place on record their thanks and appreciation to the employees of the Company at all levels, shareholders, agents and other business associates for their dedication and contribution to the Company''s operations.

Your Directors place on record their thanks to The ICICI Bank Ltd., The Federal Bank Ltd., The State Bank of India, The Bank of India and The IDBI Bank for their valuable co-operation and support to the Company.

Place : Kannur On behalf of the Board Date : 18.08.2014 Chairman

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Mar 31, 2013

The Directors have pleasure in presenting their report and audited accounts for the financial year 2012-2013

(Rs. In lakhs)

2012-2013 2011 – 2012

Sales / Other operating Income 388.68 394.05

Other Income 67.37 50.36

Gross Income 456.05 444.41

Profit before Tax 18.95 20.94

Less : Provision for Taxation 4.73 53.51

Profit / Loss for the year 14.22 -32.57

Add Loss Brought forward 2129.92 2097.35

Accumulated Loss as on 31st March 2115.70 2129.92

REVIEW OF OPERATIONS

Your Company could achieve a gross revenue of Rs.456.05 lakhs (Note no.:15 & 16) (444.41 lakhs), consisting of (i) Sales revenue of Rs.382.45 lakhs (387.79 lakhs), (ii) income from Processing Operations of Rs.6.23 lakhs (6.26 lakhs), (iii) Rental income of Rs.42.00 lakhs (31.02 lakhs) and (iv) Miscellaneous income of Rs.25.37 lakhs (19.34 lakhs). (Figures in brackets for the previous year) After adjustment and taxation your Company''s net profit this year stands at Rs.14.22 lakhs against a loss of Rs.32.57 lakhs for the previous year..

By single minded focus on increasing sales, your Company has been able to achieve sales revenue of Rs.382.45 lakhs. This is an achievement considering the most difficult period the small textile segment had to undergo during the year. It was a year of uncertainties of non-availability and unprecedented increase in price of yarn. The suppliers never gave a firm commitment of price of fabric or delivery period. Not used to the high price rise and that too frequently, fabric sales have been adversely affected. Any time there was a price increase the demand stood considerably reduced. The sales were also festival centered in that, for the year while up to 31st October the sales revenue was Rs.272.71 Lakhs, for the rest of the year the sales revenue was limited to Rs.109.74 lakhs only

In the past the Company had the benefit of some special orders demanding intricate specifications, which were executed through the inbuilt technological competence of the Company. Unfortunately owing to a structural change in the customer Company we have not received such orders during the last one and half years. Also export of made-up items used to be a good source of income in the past which during the year stood reduced to a meager sum of Rs.2.44 lakhs, as the customer insists on rates which are un- remunerative to the Company

Despite all the adverse factors your Company has been able to make its presence felt in the market and the Company''s products are still in demand, though in limited quantum for its superior quality

Your company is also exploring the possibility of more and more of institutional and special products orders to increase the sales revenue.

The other area that has come to the rescue of the Company''s'' revenue and profit is renting out of godown space in the Mill premises.

Though the rent revenue during the year has increased, considering the total area available for godown purpose, the rented area is comparatively small. This is mainly because of the buildings being more than six decades old, do not cater to modern storage facilities. Also modifications including large openings with shutters and improving the flooring and partitions sought by the lessees are highly expensive for which funds have to be found. The repair and maintenance expenditure of buildings carve a good portion of the rent income.

Your Company is passing through a stage where the surplus generated through the limited activities of outsourcing, trading and renting is consumed by the expenses related to a an ongoing Company like Stock Exchanges, Share Transfer Management, Factory License, Pollution Control Board Certification, Audit expenses and repair and maintenance of the buildings in the Mill premises. Despite these factors your Company has been able to earn a net profit of Rs. 14.22 lakhs which is attributable to the strength of the Company derived through its reputation, credibility, quality orientation and marketing strategy.

Apart from the fact that your Company had discharged huge liabilities of Bank borrowings, VR compensation to the employees and other long pending major liabilities to the creditors, its strength lies in its non dependence on outside finance.

Though lack of resources is a great constraint for product diversification and improvement of buildings in the Mill premises with modern godown facilities, yet our resolution is to restrain from borrowing and win through the policy of investment by generated funds. Your Company will make all out efforts to augment its profit to achieve this objective.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY UPGRADATION AND FOREIGN EXCHANGE EARNINGS AND OUTGO.

The report required to be made pursuant to clause (e) of Section (1) of Section 217 of the Companies Act, 1956 read with the Companies (Disclosure of particulars ( the report of Board of Directors) Rules 1988) and forming part of the Director''s report is given in Annexure A to this report.

DIRECTORS:

Retirement of Directors: Shri.R.S Nair and Shri. T.T.P.Mahamood retire by rotation in the next Annual General meeting and are eligible for reelection.

PERSONNEL:

There were no employees drawing remuneration in excess of the limits specified under section 217(2) of the Companies Act during the year under report.

CORPORATE GOVERNANCE

Pursuant to clause 49 of the listing agreement with Stock Exchanges, Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of corporate governance have been incorporated in the Annual Report. Your company is committed to good corporate governance practices to follow the guidelines provided by SEBI and stock exchanges from time to time.

DIRECTORS RESPONSIBILITY STATEMENT:

Your Directors hereby confirm:

1. That in the preparation of Accounts for the period ended 31st March 2013, applicable accounting standards have been followed along with proper explanation relating to material departures, wherever necessary.

2. That 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 for the financial year ended 31st March 2013.

3. That 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

4. That the Profit and Loss Account and Balance Sheet have been prepared on a going concern basis.

COMPLIANCE CERTIFICATE

As required under Section 383(A) of the Companies Act, 1956, Compliance Certificate obtained from Sri Murali Kanniyath, Practicing Company Secretary, Kannur, for the year ended 31st March 2013 is given in Annexure-B and forms part of this report.

AUDITORS:

M/S.T K Menon & Co., Chartered Accountants, Calicut the Statutory Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. Your Directors recommend the reappointment of the Statutory Auditors till the conclusion of the next Annual General Meeting.

INSURANCE:

The Company''s Assets have been adequately insured.

DIVIDEND.

Though the Company has earned small amounts of operational profit during the years 2010-2011, 2011-2012, and 2012 - 2013 owing to accumulated losses of Rs.2115.70 lakhs as on 31st March 2013, no dividend could be declared under the Companies Act.

ACKNOWLEDGEMENT

Your Directors place on record their thanks and appreciation to the employees of the Company at all levels, shareholders, agents and other business associates for their dedication and contribution to the Company''s operations.

Your Directors place on record their thanks to The ICICI Bank Ltd., The Federal Bank Ltd., The State Bank of India, The Bank of India and The IDBI Bank for their valuable co-operation and support to the Company.

Place : Kannur On behalf of the Board

Date: 17.8.2013 Chairman

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Mar 31, 2012

The Directors have pleasure in presenting their report and audited accounts for the financial year 2011-2012.

(Rs. In lakhs)

2011 - 2012 2010 - 2011

Sales Income 394.05 363.77

Other Income 50.36 524.29

Gross Income 444.41 888.06

Gross Profit before financial Charges & depreciation

Add/Less: 40.42 505.20

Financial charges 13.92 1.73

Depreciation 5.56 5.67

Net Profit 20.94 497.80

Adjustment for Extraordinary item -- 0.00

Net Profit before taxation 20.94 497.80

Deferred Tax / FBT 53.51 --

Less : Transfer to Capital Reserve -- 509.15

Net Profit/Loss transferred to balance sheet -32.57 -62.35

Add/Less: Loss brought forward 2097.35 2035.00

Loss 2129.92 2097.35

REVIEW OF OPERATIONS

Your Company could achieve a gross revenue of Rs.444.41 lakhs (Note no.:15 & 16), consisting of (i) Sales revenue of Rs.387.79 lakhs, against Rs.363.77 lakhs in the previous year, (ii) income from Processing Operations of Rs.6.26 lakhs,

(iii) Rental income of Rs.31.02 lakhs and (iv) Miscellaneous income of Rs.19.34 lakhs. After adjustment and taxation your Company's net loss this year stands at Rs.32.57 lakhs.

Despite the best efforts, the Company could not achieve a higher sales revenue during the year for reasons beyond its control. The year under review faced unprecedented uncertainties affecting cotton textile industry in general and that of the business of the Company in particular. The increase in the prices of cotton was frequent, unsteady and high. Not used to such high and frequent hike in the prices, the demand came down considerably. Unlike the past where orders could be placed for large quantum of grey fabric based on the then prevalent price, the suppliers never gave a firm commitment for price or delivery of grey fabric. Also the demand being sporadic the cycle of procurement of grey fabric through processing to delivery, results in delayed supplies and sometimes lead to cancellation of the orders. Taking advantage of the situation, some unscrupulous parties supply cheaper fabric to the market under established brand names including that of the Company. All these factors have contributed in not able to fulfill the hope of the Company to achieve a higher turnover during the year.

As explained earlier your Company had to suspend the manufacturing operations since November 2003 for reasons beyond its control. Thus during the year no manufacturing activity could be carried out at the factory due to the suspension of operations. The Company's presence in the market was ensured through outsourcing its products on a reduced scale and have been able to keep the brand name alive for the last nine years. One of the factors that contributed immensely to the continuous operation of the Business has been the Company's reputation, credibility, and its strength derived through its quality assurance programme which is implemented from the initial phase of manufacturing at the suppliers' premises.

The Company has discharged its major liabilities by payment of the One Time Settlement dues to the three Consortium Banks, VR compensation to the employees and other liabilities to the creditors, out of the sales proceeds of the machinery and two pieces of land located in the Mill premises.

By apt and relevant sales approach including increasing the sale prices of our products from time to time, the Company has been able to generate funds to meet the growing expenditure related to aspects beyond merely the trading, like expenses of Stock Exchanges, Share Transfer Management, Factory Licence, Pollution Control Board certification, Audit expenses and maintenance of the buildings in the mill premises.

The Company has since rented out about 35,000 sq ft of godown space, mainly to KSBC and to some small organizations and the rent received through the process during the year 2011-12 has been Rs.31.02 lakhs. Efforts are on to find more parties so that more space could be rented out.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY UPGRADATION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The report required to be made pursuant to clause (e) of Section (1) of Section 217 of the Companies Act, 1956 read with the Companies (Disclosure of particulars ( the report of Board of Directors) Rules 1988) and forming part of the Director's report is given in Annexure A to this report.

DIRECTORS:

Retirement of Directors: Shri.A.Ramachandra Shetty and Shri. A.K.Shereif retire by rotation in the next Annual General meeting and are eligible for reelection.

Appointment of CMD: Shri.P.K.Shameem was appointed as Chairman cum Managing Director with effect from 09.08.2010 for 2 years without any remuneration. The Board has reappointed him as Chairman Cum Managing Director for a further period of 2 years with effect from 09.08.2012 without any remuneration as recommended by the Remuneration Committee subject to the approval of the shareholders in the forthcoming Annual General Meeting.

The appointment of Shri TTP Mahamood as Director is included in the Agenda of the 57th AGM for approval of the shareholders.

PERSONNEL:

There were no employees drawing remuneration in excess of the limits specified under section 217(2) of the Companies Act during the year under report.

CORPORATE GOVERNANCE

Pursuant to clause 49 of the listing agreement with Stock Exchanges, Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate regarding compliance of conditions of corporate governance have been incorporated in the Annual Report. Your company is committed to good corporate governance practices to follow the guidelines provided by SEBI and stock exchanges from time to time.

DIRECTORS RESPONSIBILITY STATEMENT:

Your Directors hereby confirm:

1. That in the preparation of Accounts for the period ended 31st March 2012, applicable accounting standards have been followed along with proper explanation relating to material departures, wherever necessary.

2. That 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 for the financial year ended 31st March 2012.

3. That 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

4. That the Profit and Loss Account and Balance Sheet have been prepared on a going concern basis.

COMPLIANCE CERTIFICATE

As required under Section 383(A) of the Companies Act, 1956, Compliance Certificate obtained from Sri Murali Kanniyath, Practicing Company Secretary, Kannur, for the year ended 31st March 2012 is given in Annexure-B and forms part of this report.

AUDITORS:

M/s.T K Menon & Co., Chartered Accountants, Calicut the Statutory Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. Your Directors recommend the reappointment of the Statutory Auditors till the conclusion of the next Annual General Meeting.

INSURANCE:

The Company's Assets have been adequately insured.

DIVIDEND

Though the Company has earned small amounts of operational profit during the years 2010-2011 and 2011-2012, owing to accumulated losses of Rs.2129.92 lakhs as on 31stMarch 2012, no dividend could be declared under the Companies Act.

ACKNOWLEDGEMENT

Your Directors place on record their thanks and appreciation to the employees of the Company at all levels, shareholders, agents and other business associates for their dedication and contribution to the Company's operations.

Your Directors place on record their thanks to The ICICI Bank Ltd., The Federal Bank Ltd., The State Bank of India, The Bank of India and The IDBI Bank for their valuable co-operation and support to the Company.

Place : Kannur On behalf of the Board

Date Chairman

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Mar 31, 2010

The Directors have pleasure in presenting their report and audited accounts for the financial year 2009-2010.

(Rs. In lakhs)

2009-2010 2008-2009

Income 428.51 561.78

Gross Profit before financial Charges & depreciation 21.66 146.02

Add/Less:

Financial charges 4.05 10.08

Depreciation 5.90 6.39

Net Profit 11.71 129.55

Adjustment for extraordinary item* 66.72 45.78

Net Profit before taxation 78.43 175.33

Deferred Tax / FBT 2.50 5.77

Less : Transfer to Capital Reserve 66.72 45.78

Net Profit/Loss transferred to balance sheet 14.21 135.32

Add/Less: Loss brought forward 2049.21 2184.53

Loss 2035.00 2 049.21





- See Notes on Accounts - Item 28

REVIEW OF OPERATIONS

Your company could achieve a gross sale of Rs.394.97 lakhs against Rs.385.12 lakhs in the previous year. After financial charges and depreciation, your Companys net profit this year stands at Rs.11.71 lakhs . The profit is attributable to extraordinary income during the year due to interest on secured loan written off and advance for sale of assets forfeited totaling to Rs.20.08 lakhs (Schedule XVI).

The Company had to suspend the manufacturing operations since November 2003 for reasons beyond its control. Despite its old structure, machinery and facility the mill had been performing reasonably well for more than 4 decades until its performance results had been adversely affected by the effect of globalization and the denial by the workers to attune themselves to the requirements of globalised competition. Mounting difficulties of lack of orders due to high cost of manufacture and severe competition from manufacturers outside the State and abroad led to under utilization of plant and machinery which led to the lay-off of workers. The lay-off wages so paid added to the cost of the limited production. The situation was accentuated by the workers not agreeing to the restructuring of labour cost, the only input on which the management has control and their indulging in unfair practices of preventing entry and exit of goods to the plant and insulting the management representatives and staff. Thus the high labour cost, under utilization which made the input cost concentrated, huge inventory, mounting losses and uncooperative approach of workers led to the suspension of operations of the mill since November 2003.

Thus, during the year no manufacturing activities could be carried out at the factory due to the suspension of operations. Since suspending manufacturing operations in November 2003 your Company had been outsourcing some of the products on a reduced scale and feeding the market to keep the brand name alive from an office located in the town supported by its reputation and quality. Thus the gross sale represents the income through trading activities only. The gross turnover of Rs.394.97 lakhs includes export to the tune of Rs.33.60 lakhs.

The overall performance of the Company was not satisfactory. The Company expected a trading turnover of Rs.9 crores during the year. Due to lack of finance and demand and without export orders during the year owing to stiff competition from national and international suppliers, the Company could not achieve the target.

The one time settlements with the IDBI and the three Consortium Banks have since been paid out of sales proceeds of machinery and advance taken against proposed sale of a portion of the land in the Mill premises.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY UPGRADATION AND FOREIGN EXCHANGE EARNINGS AND OUTGO.

The report required to be made pursuant to clause (e) of Section (1) of Section 217 of the Companies Act, 1956 read with the Companies (Disclosure of particulars ( the report of board of directors) Rules 1988 and forming part of the Director’s report is given in Annexure A of this report.

DIRECTORS:

Sri P K Shameem and Sri A K Sheriff retire by rotation in the next Annual General Meeting and are eligible for re-election.

PERSONNEL:

There were no employees drawing remuneration in excess of the limits specified under section 217(2) of the Companies Act during the year under report.

CORPORATE GOVERNANCE

Pursuant to clause 49 of the listing agreement with Stock Exchanges, Management Discussion and Analysis, Corporate Governance Report and Auditors certificate regarding

compliance of conditions of corporate governance have been incorporated in the Annual Report. Your company is committed to good corporate governance practices to follow the guidelines provided by SEBI and stock exchanges from time to time.

DIRECTORS RESPONSIBILITY STATEMENT:

Your Directors hereby confirm:

1. That in the preparation of Accounts for the period ended 31st March 2010, applicable accounting standards have been followed along with proper explanation relating to material departures, wherever necessary.

2. That 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 for the financial ended 31st March 2010.

3. That 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

4. That the Profit and Loss Account and Balance Sheet have been prepared on a going concern basis.

COMPLIANCE CERTIFICATE

As required under Section 383(A) of the Companies Act, 1956, Compliance Certificate obtained from Sri Murali Kanniyath, Practicing Company Secretary, Kannur, for the year ended 31st March, 2010 is given in Annexure-B and forms part of this report.

AUDITORS:

M/S.T K Menon & Co., Chartered Accountants, Calicut the Statutory Auditors, retire at the ensuing Annual General Meeting and are eligible for re-appointment. Your directors recommend the reappointment of the Statutory Auditors till the conclusion of the next Annual General Meeting.

INSURANCE:

The Companys Assets have been adequately insured.

ACKNOWLEDGEMENT

Your Directors place on record their thanks and appreciation to the employees of the Company at all levels, shareholders, agents and other business associates for their dedication and contributions to the Companys operations.

Your Directors place on record their thanks to the ICICI Bank Ltd., Kannur and the Federal Bank Ltd., Kannur for their valuable co-operation and support to the Company.

On behalf of the Board

Place : Kannur Sd/-

Date : 09.08.2010 Chairman