Cheslind Textiles Ltd Directors Report

Dear Shareholders,

The Directors present the Annual Report together with the Audited Balance Sheet as at 31st March 2014 and the Statement of Profit and Loss of CHESLIND TEXTILES LIMITED for the year ended on 31st March 2014.

COMPANYS PERFORMANCE

Your Companys performance during the year 2013-14 (12 months) and for the period October 12 to March 13 (6 months) is summarized below:

FINANCIAL RESULTS

(Rs. lakhs)

	2013-14	2012-13
	(12 months)	(6 months)
Turnover
Export	21,435	7,856
Domestic	4,637	2,517
TOTAL	26,072	10,373
Profit/(Loss) before Interest & Depreciation	2,508	1,431
Less : Interest	1,473	624
Profit/(Loss) before Depreciation	1,035	807
Less : Depreciation	687	343
Profit/(Loss) before Tax and Exceptional Items	348	464
Less : Exceptional Items	-	-
Profit/(Loss) before Tax	348	464
Less: Income Tax	-	-
Profit/(Loss) after Tax	348	464
Add : Opening Balance	(2,971)	(3,435)
Loss Carried Forward	(2,623)	(2,971)

OPERATIONAL PERFORMANCE

The Financial Year 2013-14 was a year of consolidation of various actions taken by the management during FY 2012-13 and result of further actions taken during the year under review so as to optimize the production and product mix. During FY 2013-14 the cotton prices were more or less stable throughout the year. The export sales as well as contribution on sales improved during this period. During the period the Company incurred a CAPEX of Rs. 414 lakhs to improve the process conditions - waste collection system and humidity in the RF departments, replacing 11 under performing Ring Frames (RF) with second hand RFs of better condition and by adding a few more machines to optimize the working of all machines in all departments. With all these, the target production of 28 MT per day was achieved. Further, there is no improvement in power situation in the state of Tamil Nadu. Unscheduled power cuts and load shedding coupled with tripping have affected the operations of the Company. The arrangements with wind power generators for long term supply of power to mitigate the shortage of power from TNEB has helped operations to run un interruptedly. Over all power cost remained high. With good demand in the export market, increased production volumes and continuity of orders from regular customers, the performance of the Company was maintained, except that additional expenditure was there for further improving the process conditions - waste collection and Humidity in RF departments.

DIVIDEND

Your Directors are unable to recommend any Dividend on the Equity Shares in view of the financial position of the Company.

CORPORATE GOVERNANCE

Your Company is committed to good Corporate Governance practices. Your Directors endeavour to adhere to the standards set out by the Securities and Exchange Board of Indias (SEBI) Corporate Governance practices and accordingly has implemented all the major stipulations prescribed. The Practicing Company Secretarys certificate dated 16th April 2014 in line with Clause 49 of the Stock Exchange Listing Agreement is attached to this report.

CONTRIBUTION TO THE EXCHEQUER

Your Company has contributed an amount of Rs.157.44 lakhs in terms of taxes and duties to the exchequer.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors state that:

• in the preparation of the Annual Accounts the applicable Accounting Standards have been followed;

• appropriate Accounting Policies have been selected and applied consistently and they have 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 on 31st March 2014 and of the Profit and Loss of the Company for the year ended on that date;

• proper and sufficient care has been taken 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;

• the Annual Accounts have been prepared on a going concern basis.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required to be disclosed pursuant to Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, is given in Annexure which forms part of the Report.

DIRECTORS

Mr. Prakash Maheshwari retire by rotation and being eligible offer himself for re-appointment.

Your Directors further inform the members that in accordance with the provisions of the Companies Act, 2013, and clause 49 of the listing agreement and as per SEBI Circular dated 17th April, 2014, the Company is required to appoint the Independent Directors on the Board to hold office for one more term of five consecutive years on the Board of the Company and such independent directors shall not be liable to retire by rotation. Accordingly, it is proposed to appoint the following Independent Directors who have completed five years on the Board, viz. Mr. G B Bagrodia and Mr. S C Parasrampuria for one more term of five consecutive years commencing from the ensuing AGM. The Board recommends the appointment of Mr. G B Bagrodia and Mr. S C Parasrampuria.

INTERNAL CONTROL SYSTEMS

The Company has in place proper, adequate and effective Internal Control Systems commensurate with the nature and size of its operations, to ensure that all systems and procedures are functioning satisfactorily and all policies are being duly complied with. The operations of the Company are regularly reviewed by the Audit Committee, which examines and evaluates the adequacy, relevance and effectiveness of the Internal Control Systems and its compliance with prevailing laws and regulations. The Audit Committee makes appropriate recommendations for improvement in efficiencies and effectiveness of the Internal Control Systems.

PARTICULARS OF EMPLOYEES

There is no employee drawing remuneration falling within the limits specified under Section 217(2A) of the Companies Act, 1956 hence no statement is enclosed.

AUDITORS

The Companys Auditors M/s. K P Rao & Co, Chartered Accountants and M/s. M Bhaskara Rao & Co, Chartered Accountants retire at the conclusion of the ensuing Annual General Meeting of the Company and being eligible, offer themselves for re-appointment.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their gratitude and thank the Customers, Dealers and Suppliers, Investors, Members, Banks, Financial Institutions, Central and State Governments for their continued support and co-operation. Your Directors also thank the employees of the Company across all levels for the sincere and hard work put in by them during the year under review.

	For and on behalf of the Board
Place : Bangalore	Ravi Jhunjhunwala
Date : 18th April 2014	Chairman
	DIN-00060972

ANNEXURE TO DIRECTORS REPORT

STATEMENT OF PARTICULARS PURSUANT TO COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

1. CONSERVATION OF ENERGY

a) Energy conservation measures taken:

1) Replacement of lesser diameter rings in Ring frames to optimize the Power consumption.

2) Use of lesser weight tubes in Ring frames and there by savings in Power consumption.

3) Optimizing the Compressed air consumption in all the machines by arresting leakages result in to Power savings in compressed air system.

4) Use of 28W Electronic ballast in place of 36W and to reduce the Power consumption in lighting system.

5) Lighting Energy saver is incorporated in lighting system there by savings in lighting power consumption.

6) Addition of capacitors in load centers to improve power factor and to reduce power wastages.

b) Impact of measures taken under (a) above for the reduction of energy consumption and consequent impact on the production of goods

The above measures reduced the Power consumption by 3000 units/day.

POWER AND FUEL CONSUMPTION

Sl. Description No.	2013-14 (12 months)	2012-13 (6 months)
I. CONSUMPTION OF ENERGY, POWER AND FUEL
1. ELECTRICITY
a) Purchased from EB, IEX, Wind Power, TP Power
Units(in lakhs)	405.53	178.89
Total amount (Rs.in lakhs)	2611.64	1231.25
Rate/Unit (Rs.)	6.44	6.88
b) Own Generation
i) Through Diesel Generator
Units (in lakhs)	2.05	0.67
Units/Ltr. of Diesel Oil	2.45	2.24
Cost/Unit (Rs.)	19.17	17.47
ii) Through HFO Power Plant
Units (in lakhs)	14.36	4.92
Units/Ltr of Furnace oil/Diesel Oil	3.79	3.90
Cost/Unit (Rs.)	15.02	12.79
II. CONSUMPTION PER UNIT OF PRODUCTION
Electricity/Diesel/Furnace oil (Units consumed per Kg of yarn converted to 40s)	4.92	4.94
III. FOREIGN EXCHANGE EARNINGS AND OUTGO
1. Foreign Exchange Earning
Export Sales (F.O.B.) (Rs.in lakhs)	20805.52	7492.44
2. C.I.F. Value of Imports
i) Raw Materials (Rs. in lakhs)	-	32.84
ii) Components & spare parts (Rs. in lakhs)	99.05	29.42
3. Expenditure incurred in Foreign Currency (Rs.in lakhs)	364.82	126.77

2. TECHNOLOGY ABSORPTION

A. RESEARCH & DEVELOPMENT

Specified areas of R&D carried out by the Company and future plan of action

1. Slub Yarn attachments in eight machines are upgraded with Electronically controlled latest version by replacing mechanically controlled version to improve the efficiency with better Quality.

2. Fancy yarn development neppy /cut slub yarn manufacturing as per customer requirement.

B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

a) Efforts in brief, made towards technology absorption, adaptation and innovation

Preparatory

1. Continuous waste collection system in carding section for improving card efficiency.

2. Centralized Continuous waste collection system with automatic baling machine for all combers for improving combing machine efficiency

3. Added two technologically advanced carding machines with high production chutes LC363 model

4. Added technologically advanced lap former machine LH 15 model

5. Added technologically advanced LK 64 Z model combing machines 6 nos

6. Added technologically advanced LF 4200A speed frame one machine

7. Added technologically advanced yarn conditioning machine Siegar make

8. Upgraded existing contamination removing Vetal machine with new version of PP contamination removing facility

b) Benefit derived as a result of the above efforts

Overall cost reduction by applying energy saving devices, value addition to our products.

c) In case of recently imported technology, the requisite information in brief

Not applicable.

	For and on behalf of the Board
Place : Bangalore	Ravi Jhunjhunwala
Date : 18th April 2014	Chairman
	DIN-00060972