Khatau Makanji Spinning & Weaving Company Ltd

FOR THE YEAH ENDED 31sl MARCH 2010

Your Directors are pleased to present their 135th Annual Report together with theAudited Accounts of your Company for the year ended 31st March, 2010-

FINANCIAL RESULTS:

DIVIDENDS

The Directors do not recommend any dividend In order to reduce the deficit andstrengthen the Balance Sheet of the Company.

OPERATIONAL REVIEW

The Company is into trading operations in textiles i e. Sarees, dress material,Cambrics, Dhoties etc.

IMPLEMENTATION OF THE SCHEME OF REHABILITATION

The Company is implementing the rehabilitation scheme under BIFR order. The Company hascompleted the following as per the rehabilitation scheme:

1. Issue of 17,49,000 Equity Shares to the promoters and listing of the same with BSE.

2. The face value and paid up value of the shares has been reduced form Rs.100/- to Rs.10/- and the same has been approved by BSE.

3. Revival of Trading /Manufacturing Operations at Mahad.

4. Settlement of dues of secured lenders including workers have bean completed

5. Settlement of statutory bodies have been completed.

6. Unsecured Creditors have been paid and discharged in accordance with the sanctionedscheme.

7. The company has paid and discharged dues of all the debentjreholders as per thesanctioned scheme, 3- Fixed Deposit holders are being paid and discharged as per thesanctioned scheme.

DIRECTORS

Mr B S Desai and Ms. Neesha Khatau, retire by rotation at the for the coming AnnualGeneral Meeting, and being eligible, offer themselves for re-appointment.

Mr.Mahandra Vinchhi resigned from the Board of Diractors of the company w.e.f. 21stSeptember, 2009.

DEPOSITS

The company has not accepted any fresh deposits during the year.

PARTICULARS OF EMPLOYEES

No employee is in receipt of remuneration of Rs.2,00.000/- or more per month or Rs24,00,000/-or more per annum during the period under review Hencs, the details ofremuneration paid to employees and other details as required by section 217 (2A) of theCompanies Act, 1950 read the Companies (Particulars of Employees) Rules. 1975, as amended,are not given.

LISTING

a. The Company has paid all the arrears of listing fees and current listing fee.

b. BSE has asked for certain fresh compliances and the Company has furnished alldetails and Is awaiting for BSE clearance for lifting of suspension of trading of shares.

c. BSE vide its letter dated 18.10.2007 approved the reduction of value of share fromRs.100 each to Rs.10 each.

d BSE vide its letter dt.26.5.2010 Informed the Company that listing of 17,49,000shares allotted to Promoters as per Hon'ble BIFR Order is being considered.

AUDITORS' REPORT

As regards the observations, reservations or qualifications of the Auditors in theAuditors' Report, the relevant notes on the Accounts are self-explanatory-

AUDITORS

The Company's auditors Messrs Sorab S. Engineer & Co., Chartered Accountants, holdoffice up to the conclusion of the ensuing Annual general meeting. The Company hasreceived communication from them to the effect that their appointment, If made, would bewithin the limits prescribed under section 224(1B) of the Companies Act, 1956. They areproposed to be appointed as the Auditors of the Company to hold office until theconclusion of next Annual General Meeting.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO

In accordance with the provisions of section 217 [1] (e) of the Companies Act, 1956,the required information relating to Conservation of Energy, Technology Absorption,Foreign Exchange earnings and outgo, is not annexed to this Board Report since there Is nomanufacturing operation of the Company during the year .

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement u/s.217(2AA) of the Companies Act, 1956 with respect to theDirectors Responsibility Statement, it is hereby confirmed:-

(i) that in preparation of the annual accounts for the year ended 31 03.2010 theapplicable accounting standards had been followed along with proper explanations relatingto material departures.

(ii) that the Directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the slate of affairs of the Company at the end of the periodand the profit of the Company for the period under report.

(iii) that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.

(iv) that the Directors have prepared the accounts for the period ended 31,03,2010 on agoing concern basis'.

ACKNOWLEDGEMEMT

Your Directors are grateful to all the shareholders and deposit-holders for theircontinued support during the Company's critical phase and all employees at various levelsfor their sincere work and devotion.

COMPLIANCE CERTIFICATE

To

The Members,

Khatau Makanji Spinning and Weaving Company Limited,

We have examined the registers, records, books and papers of Khalau Makanji Spinningand Weaving Company Limited (the Company) as required to be maintained under theCompanies Act, 1956 (the Act) and the rules made thereunder and also the provisionscontained in the Memorandum and Articles of Association of the Company for the financialyear ended on 31st March, 2010, In our opinion and to the best of our information andaccording to the examinations carried out by us and explanations furnished to us by thecompany, its officers and agents, we certify that in respect of the aforesaid financialyear:

1. The company has kept and maintained all registers as stated in Annexure 'A' to thiscertificate, as per the provisions and the rules made thereunder and all entries there inhave been duly recorded,

2 The company has duly tiled the forms and returns as stated In Annexure 'B' to thiscertificate, with the Registrar of Companies or other authorities within the timeprescribed under the Act and the rules made thereunder.

3. The company is a public limited company the restriction clauses as provided insection 3 (1) (iii) of the Companies Act, 1956, is not applicable. The Company has theprescribed minimum paid up capital.

4 The Board of Directors duly met 5 times on 27th April, 2009, 16th July, 2009, 21stAugust 2009. 27th October, 2009 and 27th January, 2010 in respect of which meetings,proper notices were given and the proceedings were properly recorded and signed.

5. The company has closed its Register of Members from 16th September 2009 to 18thSeptember. 2009 and necessary compliance of Section 154 of the Act has been made.

6. The annual general meeting for the financial year ended on 31st March, 3009 was heldon 18th September. 2009 after giving due notice to the members of the company and theresolutions passed there at were duly recorded in Minutes Book maintained for the purpose.

7. No extra ordinary general rneeting was held during the financial year under review.

8. The company has not advanced any loans to its directors and/or persons or firms orcompanies referred in the section 295 of the Act.

9. The company has not entered any contracts falling within the purview of section 397of the Act.

10, The company has made necessary entries in the register maintained under section 301of the Act.

11. As there were no instances falling within the purview of section 314 of the Act,the Company has not obtained any approvals from the Board of Directors. Members or CentralGovernment, as The case may be.

12, The Board of Directors approves the issue of duplicate share certificates from timeto time. 13 The Company has:

(i) not made any allotment of securities during the financial year. Nil shares of theCompany are demateriaIized and 100% of the shares of the Company are in physical form Thetransfer/ transmission of physical shares is duly executed by the Company's appointedRegistrar and Share Transfer Agent, M/s, Sharex Dynamic (India) Private Limited. The BoardMeeting takes on record all the physical share transfers/transmission from time to timeFunther, all the share certificates lodged for transfers/transmission are duly deliveredto the shareholders in accordance with the provisions of the Act.

(ii) not deposited any amount in a separate bank account as no dividend was declaredduring the financial year.

(iii) not posted warrants to any member of the company, as no dividend was declaredduring the financial year

(iv) no unpaid dividend, application money due for refund, matured deposits, matureddebentures and the interest accrued thereon which have remained unclaimed or unpaid and asare required to be Transferred to Investor Education and Protection Fund.

(v) duly complied with the requirements of section 217 of the Act

14. The Board of Directors of the company is duly constituted. There was no appointmentof additional directors, altemate directore and directors to fill casual vacancy duringthe financial year. However during the financial year Mr, Mahendra Vinnchi resigned fromthe Board of Directors of the Company 21st September, 2009

15. The company is not required to appoint any managing director / whole time director/manager during the financial year.

16. The company has not appointed any sole' Salling agents during the financial year.

17. The company was not required to obtain any approvals of the Central Government,Company Law Board, Regional Director, Registrar or such other applicable authorities asmay be prescribed In the Act during the year under review,

18 The directors have disclosed their Interest In other firms/companies to the Board ofDirectors pursuant to the provisions of the Act and the rules made thereunder.

19. The company has not Issued any shares/ shares/debentures/other securifies duringthe financial year.

20. The company has not bought back any shares during the financial year

21. There was no redemption of preference Shares Or debentures during the financialyear,

22. There were no transaction necessitating the company to keep in abeyance the rightsto dividend, rights shares and bonus shares pending registration of transfer of shares.

23. The company has not accepted deposits within the meaning of section 58A of theCompanies Act, 1958 during the financial year.

24. The company has not made any borrowings during the financial year.

25. The company has not given guarantees or provided securities to other bodiescorporate and consequently no entries are made In the Register kept for the purpose.However the Company has given loans and made Investments in other Bodies Corporate and thenecessary entries were made in the register kept for that purpose,

26. The company has not altered the provisions Of the memorandum with respect tosituation of the company's registered office from one State to another during the yearunder scrutiny.

27. The company has not altered the provisions of the memorandum with respect to theobjects of the company during the year under scrutiny.

28. The company has not altered the provisions of the memorandum with respect to nameof the company during the year under scrutiny.

29. The company has not altered the provisions of the memorandum with respect to sharecapital of the company during the year under scrutiny.

30 The company has not altered Its articles of association during the financial year.

31. There was no prosecution initiated against or show cause notices received by thecompany during the financial year for offences under the Act,

32. The company has not received any money as security from its employees during thefinancial year under certification as per provisions of section 417(1) of the Act-

33. The company has deposited both employee's and employer's contribution to ProvidentFund with prescribed authorities pursuant to section 418 of the Act

Annexure A

Registers as maintained by the Company

1. Register of Members u/s- 150.

2. Register of Transfers

3. Register of Directors, Managing Director, Manager and Secretaries u/s, 303,

4, Register of Contracts with the Companies and firms in which directors are directlyor indirectly interested u/s. 301.

5. Register of Director's Shareholding u/s. 307.

6. Minutes of the Annual General Meetlng/Extra Ordinary General Meeting and BoardMeeting under section 193.

7. Register of Charges

Annexure B

Forms and Returns as filed by the Company with the Registrar of Companies, RegionalDirector, Central Government or other authorities during the financial year ending on 31stMarch, 2010,

1. Form 23AC containing the Balance Sheet and Form 23ACA containing the Profit LossAccount for the year ended 31st March, 2000 was filed as per Section 220 of the Act withthe Registrar of Companies, Maharashtra on 23rd September, 2009

2. Form 66 containing the Compliance Certificate obtained from M/s. P P Shah and Co..Practising Company Secretaries, for the year ended 31st March, 2009 was filed as perSection 383A of the Act with the Registrar of Companies, on 23rd September, 2009

3. Form 20B containing the Annual Return as per Schedule V to the Act as on the date ofAnnual General Meeting of the Company i.e, 18th September, 2009 was filed as per Section159 of the Act with The Registrar of Companies, Maharashtra, on 25th September, 2003

4. Form 32 with respect to resignation of Mr. Mahendra Vinchhi as Director of theCompany, w.e.f. 21st September, 2009 was filed with the Registrar of Companies,Maharashtra on 251b September, 2009.