Blue Blends (India) Ltd

To

The Members,

The Directors present herewith the 29th Annual Report together with the AuditedAccounts of the Company for the year ended 31st March, 2010.

DIVIDEND

The Board of Directors does not recommend any dividend on Equity or Preference Sharesfor the year ended 31st March, 2010.

OPERATIONS

During the year under review the Company recorded a turnover of Rs. 120.69 crores asagainst Rs. 107.38 crores in the previous year making growth of about 12.40 percent overthe past year. The Net Losses of the Company in the year under review stood at Rs. 96.91Lacs as against the Losses of Rs. 739.90 Lacs in the past year. However after writing backof Interest Liabilities of Rs. 58.13 Crores which are not payable now, the Company earneda net profit of Rs. 57.16 crores during the year under review. The Company, however,continues to be a Sick Company within the meaning of section 3(1 )(o) of SICA

REFERENCE TO BIFR

As you are aware, the Company has been declared a Sick Industrial Company by Board forIndustrial and Financial Reconstruction (BIFR) vide their Order dated 29th March, 2006.

The Company's Reference before the Hon'ble BIFR was abated by the Hon'ble BIFR videorder dated 22/06/2010 as per third proviso of Section 15(1) of Sick Industrial Companies(Special Provisions) Act, 1985.

The Company has filed a Miscellaneous Application before the Hon'ble BIFR forrestoration of the Reference in view of the withdrawal of the measures and action underSARFAESIA by IFCI Ltd. and the said Application is pending for disposal.

AUDITORS' QUALIFICATION

1. As regards Auditors' Qualification in para no.5 of their Report, kindly refer toNote No. 4 of Schedule 'M' which is self explanatory.

2. As regards Auditors' Qualification in parano.7 of their Report, kindly refer to NoteNo. 5 of Schedule 'M' which is self explanatory.

CURRENT YEAR

The sales and other income for the first three months ended on 30th June,2010 of thecurrent year is at Rs. 36.95 crores as against Rs. 26.32 crores during the period ended on30th June 2009 in the previous year.

SUBSIDIARY COMPANY

The Reports and Accounts of Blue Blends Equity Ltd. for the year ended on 31st March,2010 are annexed to this Report.

FIXED DEPOSITS

During the year the Company has neither invited nor accepted or renewed any FixedDeposit. The company has paid all the claimed fixed deposits and fixed deposits remainingunclaimed for a period of seven years from the date of maturity have been transferred tothe Investor Education and Protection Fund pursuant to the Provisions of Section 205C ofthe Companies Act, 1956 and Investor Education and Protection Fund (awareness &Protection of Investors) Rules, 2001.

DIRECTORS

Mr. Suraj Dugar retires by rotation and being eligible, offers himself forre-appointment.

Mr. S K Tambawalla retires by rotation and being eligible, offers himself forre-appointment.

Smt. Rashmi Sachdev has been nominated as a Director of the Company by IFCI Ltd. inplace of Mr. V Sreekumaran

Nair with effect from 29th October, 2009.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement undersection 217 (2AA) of the Companies Act, 1956 withrespect to Director's Responsibility Statement, it is hereby confirmed:

i) That in the preparation of the accounts for the financial year ended 31st March,2010 the applicable accounting standards have been followed along with proper explanationrelating to material departure,

ii) That the Directors have selected such accounting policies and applied themconsistently and made judgment and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for the year under review.

iii) That the Directors have taken proper and sufficient care for the maintenance ofadequate records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

iv) That the Directors have prepared the accounts for the financial year ended 31stMarch, 2010 on a "going concern" basis.

PERSONNEL

The information as required under Section 217(2A) of the Companies Act,1956 read withthe Companies (Particulars of Employees) Rules, 1975 are given in the Annexure to thisReport. The relation with the employees remained cordial throughout the year. TheDirectors wish to place on record their thanks for the support and co-operation receivedfrom the employees at all levels.

LISTING FEES

The Company has paid up to date listing fees to BSE and NSE. Listing fees to The StockExchange, Ahmedabad. Madras and Delhi remains unpaid. The applications of the company forde-listing of the Company's securities from the Madras Stock Exchange, The Stock Exchange,Ahmedabad and Delhi Stock Exchange are pending.

CORPORATE GOVERNANCE

In terms of clause 49 of the Listing Agreement with the Stock Exchanges a Report on theCorporate Governance is appended as annexure to this report.

AUDTT COMMITTEE

The company has constituted an Audit Committee of Directors as required underSection292A of the Companies Act, 1956. Some of the terms of reference of Audit Committee are toreview the financial reporting process and to examine accountancy, taxation, anddisclosure aspect of significant transactions.

AUDITORS

M/s. P.C. Surana & Co., Chartered Accountants, Mumbai hold office as Auditors ofthe Company till the conclusion of the ensuing Annual General Meeting and are eligible forre-appointment. The appointment of M/s P.C. Surana & Co. as auditors of the Company isproposed to be made by Special Resolution since more than twenty five percent of thesubscribed share capital of the Company is held by Banks/Financial Institutions. The Boardof Directors recommends the resolution.

COST AUDIT

Pursuant to the directives of the Central Government under the provisions of Section233 B of the Companies Act, 1956, qualified Cost Auditors have been appointed to conductcost audit relating to textile products manufactured by the Company.

PARTICULARS UNDER SECTION 217(1) (e) OF THE COMPANIES ACT, 1956

As required 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, therelevant information is given below:

A. CONSERVATION OF ENERGY:

a) Energy Conservation Measures Taken: Energy conservation remains one of the mostimportant areas of plant's performance and is being continuously monitored Some of themeasures taken are:

i. Separate energy meters have been installed for effectively monitoring the section

ii. Additional capacitor banks have been installed in different section.

iii. We have made optimum use of electrical motors and day light resources at plant.

b) Additional Investments and proposals, if any being implemented for reduction inconsumption of energy: Re-sizing of the motors is being done to run the motors at fullload conditions.

c) Impact of measures at (a) and (b) above for reduction in energy and consequentimpact on the cost of production of goods: Energy conservation measures have lead toreduction in the cost of production.

d) Total energy consumption and energy consumption per unit of production as per Form Aof the Annexure in respect of industries specified In the schedule thereto:

B TECHNOLOGY ABSORPTION

The Company is regularly getting its products tested by Ahmedabad Textile IndustryAssociation (ATIRA), one of the premier textile research bodies at Ahmedabad and theproduct is constantly improved based on reports given by ATIRA. The Company is alsosending its delegates from time to time to participate in the Seminars and Conferencesorganized by ATIRA to share information pertaining to research and development andinnovations in the textile products. The concerned executives of the Company also visitexhibitions abroad especially European countries to be in tune with the latest designs.Such participations enable the Company to absorb and adopt the latest available technologyin the industry. The Company is not using imported technology in the manufacturingprocess.

C. Foreign Exchange Earnings and Outgo

Your Company is taking proper steps to exploit export opportunities includingdevelopment of new export markets. Foreign Exchange Earnings were Rs. Nil (previous yearRs.Nil) as against the outgo of Rs. 304.42 Lakhs (previous year Rs. 235.80 lacs).

ACKNOWLEDGEMENTS

Your Directors acknowledge with gratitude, the co-operation and assistance given by theFinancial Institutions, Bankers and Customers of the Company during the year under review.

ANNEXURE 'A' TO THE DIRECTORS' REPORT

Statement of Particulars of the employees pursuant to section 217(2A) of the CompaniesAct.,1956 and Companies (Particulars of Employees) Rules, 1975 forming part of theDirectors' Report for the year ended 31st March,2010. _