Alok Industries Ltd

To

Dear Shareholders,

We have plea sure in presenting the Annual Report of your Company together with the Audited Accounts for the financial year ended 31 March 2009. The summarised financial results (stand-alone) are given below in Table 1.

Table 1: Financial Highlights: Stand-Alone

Rs. Crore

Notes: Includes.

Foreign exchange loss. Rs. 14.25 crore for year ended 31 March 2009 Foreign exchange gain. Rs. 43.63 crore for year ended 31 March 2008

Previous years figures have been regrouped wherever necessary to bring them in line with the current year s representation of figures

Performance

During the financial year, your Company recorded sales of Rs. 2,976.93 crore (increase of 37.16%) and profit before tax of Rs. 284.99 crore (decrease of 4.23%) over the previous year. Including extraordinary items, your Company's profit before tax stood at Rs. 306.51 crore. Your Company's exports (including incentives) increased 1.70% — from Rs. 1,036.88 crore in 2007-08 to Rs. 1,054.50 crore during the year under review.

The sales performance of all the divisions of your Company, their share in the overall business and their growth over last year are reflected in Table 2 below.

Table 2. Division-wise Sales Performance. 2008-09 vs. 2007-08

Rs Crore

Note.

The Retail Operations of Alok Industries Ltd. has been transferred to Alok Retail (India) Ltd. w.e.f. 1 December 2008. All sales of Retail Operations till that date have been allocated to the respective business segments. Apparel Fabrics, Home Textiles and Garments

Details of your Company's performance for the year under review are given in the 'Management Discussion and Analysis', which forms part of this Directors' Report.

Dividend

Your Directors had recommended and you had approved the payment of interim dividend of Rs. 0.75 per equity share of Rs. 10/- each. A total amount of Rs. 14.17 crore (excluding tax of Rs. 1.75 crore) was made on 6 May 2009, with the record date of 2 May 2009.

Your Directors feel that prudent business practice demands that, at a stage where your Company is growing rapidly, the financial reserves of your company should be built up. Keeping this in mind, the Directors recommend that the interim dividend paid be treated as the final dividend and no further dividend be declared for the year ended 31 March 2009.

Capital

During the year under review, your Company allotted following equity shares.

Rs. Crore

The Company, on 31 March 2009, announced Rights Issue of 408,723,061 equity shares with a face value of Rs. 10/- each for cash at a price of Rs. 11/- including premium of Rs. 1/- aggreg ating to Rs. 4,495,953,671/- to the existing shareholders of the company on Right Issue basis in the ratio of 83 rights e quity shares for every 40 equity shares held on the record date, i.e. 25 March 2009. The is sue was closed on 22 April 2009 and wa s oversubscribed 1.15 times.

Reserves

Your Company proposes to transfer Rs. 190.83 crore to Debenture Redemption Reserve out of the balance available for appropriation, therefore, after transfer to Debenture Redemption Reserve, the balance of the Profit &

Loss Account would stand at Rs. 276.63 crore. At the end of the financial year, the total reserves of the Company stood at Rs. 1,410.39 crore, the corresponding figure at the end of the previous year was Rs. 1,134.01 crore.

Loans

During the year under review, your Company has raised incremental debt, both secured and unsecured by way of rupee loans, foreign currency terms loans and non-convertible debentures aggregating to Rs. 829.04 crore.

Capital Expenditure

The Terry Towel project, which was part of Phase I & II, was commissioned during the year under review. Your Company has also successfully commissioned Continuous Polymerisation (CP) Plant at Saily (Silvassa). Phase III and Phase IV of the expansion of your Company s capacities, aggregating to Rs. 1,100 crore and Rs. 1,180 crore, stands largely completed, the balance portion is progressing well. Details of your Company s expansion plans have been dealt with under the head Capacity Expansion in the Management Discussion and Analysis accompanying this Report.

Subsidiary Companies and Consolidated Financial Statements

At the end of the financial year under review, your Company had the following subsidiaries

Business and Operations

Your Company s textiles operations have shown encouraging growth trends, both in the domestic and in the exports markets. The capacity expansions which your Company had been putting in place for the past few years are nearing completion and the volume increases are starting to be reflected in operations and sales. Marketing initiatives across the world have both de-risked your Company as well as contributed to a healthy order book. Your Company believes that its scale of operations and integration across the textile chain will, in future, offer significant advantages in both cost and revenue.

Given the increasing spending capacity of the middle-class consumer segment in India, retail remains an exciting prospect over the medium term. Your Company s retail initiative is operated through its wholly owned subsidiary Alok R etail India Ltd., which has opened ninety 'H&A' stores across India as on the date of this Report. Your Company wishes to expand the 'H&A' footprint to over 300 stores during the current financial year.

Your Company's investment in Grabal Alok (UK) L td., as part of the Group's overseas retail foray is now starting to show improved results. The stores, which are spread across the UK and offer quality apparel and fashion products at affordable prices, are also in the process of being re-branded from 'qs' to Store Twenty One'. The second half of FY 2008-09 ha s reflected improved topline, thanks to cost rationalisation and efficiency maximisation measures, the middle line has also shown improvement. I his encouraging trend has been carried on during the first quarter of the current financial year as well.

More details about your Company's business structure and initiatives are contained in the Management Discussion & Analysis. Awards and Recognition

During the year under review, your Company has been given the following awards and recognitions:

a) GOLD TROPHY awarded by TEXPROCIL for Highest Exports of Bleached / Dyed / Yarn-dyed / Printed Fabrics'

b) SILVER TROPHY awarded by TEXPROCIL for 'Highest Exports of Made-ups'

c) BRONZE TROPHY awarded by TEXPROCIL for 'Highest Global Exports'

d) SPECIAL ACHIEVEMENT AWARD awarded by TEXPROCIL 'Exports in Fabrics'

e) International Trade Awards 2008-09, prese nted by DHL - CNBC TV 18 and powered by ICRA: as

Outstanding Exporter of the Year — Textiles Corporate Social Responsibility

Alok's Corporate Social Responsibility (CSR) philosophy is focused on growing the business while ensuring that the concerns of the environment in which it operates are adequately and sustainably addressed. This encompasses the natural environment, as well as the people and communities that live in the areas where the Company operates its businesses.

Details of your Company's Corporate Social Responsibility (CSR) initiatives are given in a separate section, 'Sustainability', which forms part of the accompanying Management Discussion and Analysis and Annual Report.

Corporate Governance

A separate report on Corporate Governance is enclosed as a part of this Annual Report. A certificate from the Statutory Auditors of your Company regarding compliance with Corporate Governance norms stipulated in Ola use 49 of the Listing Agreement is also annexed to the report on Corporate Governance.

Fixed Deposits

Your Company does not have any fixed deposits under section 58A and 58AA of The Companies Act, 1956 read with Companies (Acceptance of Deposits) Rule, 1975.

Insurance

All the insurable interests of your Company including inventories, buildings, plant and machinery are adequately insured.

Directors

Mr. Dilip B. J iwrajka and Mr. Surendra B. Jiwrajka will retire from office by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for reappointment. Brief resumes of these Directors, in line with the stipulations of Clause 49 of the Listing Agreement, are provided elsewhere in this Annual Report.

During the year, Mr. K. C. Jani, and Mr. R. J. Kamath, nominees of IDBI Bank Limited, resigned from the Board of

Directors w.e.f. 8 September 2008 and 30 December 2008, respectively. Mr. K. D. Hodavdeka r was appointed in the place of Mr. K. C. Jani and Mr. A. B. Das gupta was appointed in the place of Mr. R. J. Kamath. The Board wishes to place on record their appreciation for the contributions of Mr. K. C Jani and Mr. R. J. Kam ath during their tenure as Directors of your Company.

Directors Responsibility Statement

As stipulated in Section 217(2AA) of the Companies Act, 1956, your D irectors subscribe to the 'Directors'

Responsibility Statement' and confirm that.

• in the preparation of the annual accounts for the financial year ended 31 March 2008, the applicable Accounting Standards have been followed and there has been no material departure,

• the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31 March 2008 and of the profit of your Company for the year on that date,

• 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 your Company and for preventing and detecting fraud and other irregularities,

• the Directors have prepared the annual accounts for the financial year ended 31 March 2009 on a 'going concern' basis. Auditors and Auditors Report

The observations made in the Auditors' Report are self-explanatory and therefore, do not call for any further comments under section 217(3) of the Companies Act, 1956.

The retiring Auditors of your Company, M/s. Gandhi & Parekh, are eligible for re-appointment and have indicated their willingness to accept re-appointment. In terms of Section 224A of the Companies Act, 1956, their re-appointment needs to be approved by the members and their remuneration has to be fixed.

Cost Auditor

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Company s Act, 1956 and subject to the approval of the Central Government, M/s B. J. D. Nanabhoy & Co., Cost Acc ountants, Mumbai have been appointed as Cost Auditors to conduct cost audit relating to the products manufactured by your Company.

Human Resources

The information required on particulars of employees as per Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 forms part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to all shareholders of your Company excluding the Statement of Particulars of Employees. Any shareholder interested in obtaining a copy of the said statement may write to your Company Secretary at the Corporate Office of your company

More details on the Human Resources function of your Company and its various activities are given in the 'Human Resources' and 'Sustainability' sections of the attached Management Discussion & Analysis.

Your Directors appreciate the significant contribution made by the employees to the operations of your Company during the year.

Conservation of Energy, Technology absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are attached as Annexure 'A' to this report.

Acknowledgements

Your Directors wish to place on record their appreciation of the dedication and commitment of your Company's employees to the growth of your Company. Your Directors wish to thank the Central and State Governments, Financial Institutions, Banks, Government authorities, customers, vendors and shareholders for their continued cooperation and support.

Place. Mumbai

Date. 29 J uly 2009

For and on behalf of the Board

Ashok B. Jiwrajka

Executive Chairman