VOLANT TEXTILE MILLS LIMITED - Bombay Stock Exchange · VOLANT TEXTILE MILLS LIMITED will be held at the company's Registered Office at Shreeniwas House, 2nd Floor, H. Somani Marg,

VOLANT TEXTILE MILLS LIMITED

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17th Annual General Meeting

Date : 29th September, 2012

Day : Saturday

Time : 10:30 A.M.

Place : Shreeniwas House, 2nd Floor, H. Somani Marg, Fort, Mumbai- 400 001

Book Closure : 24th September to 29th September, 2012

Dates : (both days inclusive)

CONTENTS

Board of Directors .......................................................................................................... 02

Notice ............................................................................................................................. 03

Directors' Report ............................................................................................................. 06

Annexure to Directors' Report ......................................................................................... 10

Report on Corporate Governance ................................................................................... 12

General Shareholder Information ................................................................................... 17

Management Discussion & Analysis Report .................................................................... 22

Auditors' Certificate ........................................................................................................ 25

Auditors' Report .............................................................................................................. 26

Balance Sheet ................................................................................................................. 31

Cash Flow Statement ...................................................................................................... 47

Attendance Slip .............................................................................................................. 48

Proxy Form...................................................................................................................... 48

17th Annual Report 2011-2012

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BOARD OF DIRECTORSMr. Rajesh Somani ChairmanMr. Atul B. Raval Independent DirectorMr. Dhanpal A. Tare Independent DirectorMr. Ravindra J. Lade Independent DirectorMr. S. Ramadoss Independent DirectorMr. Anantvikram Somani Managing Director

BANKERSBank of BarodaHSBC BankUnion Bank of India

AUDITORSShah, Patani & AssociatesChartered Accountants, Mumbai

REGISTERED OFFICEShreeniwas House, Ground Floor27, H. Somani Marg, Mumbai 400001

SHARE TRANSFER AGENTBIGSHARE SERVICES PRIVATE LIMITEDE-2/3, Ansa Industrial Estate, Sakivihar Road,Saki Naka, Andheri (East), Mumbai 400 072

STOCK EXCHANGEBombay Stock Exchange Limited ISIN: INE962D01025P. Jeejeebhoy Towers, Dalal Street, Mumbai 400 001. BSE CODE: 531865

WORKSK-56, MIDC Chincholi, Solapur, Maharashtra- 413255

AUDIT COMMITTEEMr. Ravindra J. Lade - ChairmanMr. Dhanpal A. TareMr. Rajesh Somani

REMUNERATION COMMITTEEMr. Ravindra J. Lade - ChairmanMr. Dhanpal A. TareMr. Rajesh Somani

SHAREHOLDERS / INVESTORS GRIEVANCE AND SHARE TRANSFER COMMITTEEMr. Ravindra J. Lade - ChairmanMr. Dhanpal A. TareMr. Rajesh Somani


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NOTICE

Notice is hereby given that the Seventeenth Annual General Meeting of the Shareholders ofVOLANT TEXTILE MILLS LIMITED will be held at the company's Registered Office at ShreeniwasHouse, 2nd Floor, H. Somani Marg, Fort, Mumbai 400 001 on Saturday the 29th day of September,2012 at 10.30 a.m. to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Audited Balance sheet as at March 31, 2012 and the Profitand Loss Account and the Cash Flow Statement for the year ended on that date and the Reportof the Directors and Auditors thereon.

2. To appoint Directors in the place of Mr. Rajesh Somani and Mr. S. Ramadoss who retire byrotation as Directors and, being eligible, offer themselves for re-appointment.

3. To appoint Auditors and fix their remuneration.

By order of the Board of Directors

Sd/-Rajesh Somani

(Chairman)

Mumbai, 05th September, 2012

Registered Office:Shreeniwas House,Ground Floor, H. Somani MargMumbai - 400 001.


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NOTES:

1. A MEMBER WHO IS ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTILED TO APPOINTA PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBEROF THE COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST BE RECEIVED BYTHE COMPANYNOT LESS THAN 48 HOURS BEFORE THE MEETING

2. The Register of Members and Share transfer Book in respect of Equity Shares of the Companywill remain closed from Monday, 24th September, 2012 to Saturday, 29th September, 2012(both days inclusive).

3. The relevant details of directors seeking reappointment under Item No. 2 as required underClause 49 of the Listing Agreements entered into with the Stock Exchanges is given hereinbelow.

1. Mr. Rajesh Somani (DOB 12/04/1952) is a Director of the Company since 08th July 1994. Heis having experience of 5 years in Pudumjee Pulp & Paper Mills Ltd. in all aspects ofmanufacturing, marketing, finance and management. And experience of 7 years inShreeniwas Cotton Mills Ltd. as incharge of yarn sales and upcountry fabric sales till theclosure of the unit. And also having experience in export marketing of cotton grey fabricsin a private company which got registered as a Export House by the government. He is amember of Board of Directors of M/s Lahoti Terra Knitfab Ltd. and M/s Force ProtectiveSolutions Pvt. Ltd. (a subsidiary of M/s Volant Textile Mills Ltd.) other than Volant TextileMills Ltd. He holds 64,36000 shares in the Company.

2. Mr. S. Ramadoss (DOB 26/10/1946) is a Director of the Company since 27th January 2010.He has over 40 years of experience in different capacities. Started career after graduationfrom Madras University in 1957 at supervisory level, at the erstwhile Mettur Chemicals &Industrial Corporation Ltd. (presently merged with Chemplast Ltd.) T.N. and was associatedwith commissioning of Chloromethanes of all the 16 units in both the fuel & Lube oilsectors. Resigned IOC, as a process Engineer for joining IDBI in 1983 as industrial Financeofficer. Worked with the bank for 26 years up to March 31, 2005 and took VoluntaryRetirement as General Manager. During tenure in IDBI, worked in different centres in ProjectFinancing, Technology Dept., Venture Financing, Rehabilitation Finance Dept. etc. He wasnominee director in reputed companies like Lakshmi Mills Ltd., Toured widely both withinand outside India, and attended various seminars, Training programs etc. and was Chairmanof a number of Asset Sales Committees appointed by BIFR. After retirement functioning asFinancial Adviser. He is a member of Board of Directors of M/s Garuda Cotex Shades Ltd.other than Volant Textile Mills Ltd. He does not hold any shares in the Company.

4. The Company has entered into agreements with National Securities Depository Ltd. (NSDL)and Central Depository Services (India) Ltd. (CDSL). Shares of the Company are in compulsorydemat settlement mode. Members are advised to send the shares of the Company held inphysical form through their Depository Participant for demat purposes to the Company'sRegistrar and avail the benefit of paperless trading.


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5. Members are requested to affix their signature at the space provided in the attendance slipwith complete details including the Folio No. and hand over the slip at the entrance of theregistered office.

6. Members are requested to notify change in their address, if any, immediately to the Company'sRegistrar.

7. Members desiring any information with regards to accounts are requested to write to theCompany at an early date so as to enable the Management to keep the information ready.

8. The members are requested to note that the Company's Registrar and Share Transfer Agent isM/s. Bigshare Services Private Limited, E/2 Ansa Industrial Estate, Sakivihar Road, Saki Naka,Andheri (E), Mumbai 400 072. The members are requested to lodge their shares for transfer,transmission, splitting, consolidation etc. directly to them.

9. The Ministry of Corporate Affairs ("MCA") has taken a "Green Initiative in the CorporateGovernance" by allowing paperless compliances vide a circular dated April 21, 2011 statingthat a company would have complied with Section 53 of the Act, if the service of documentshas been made through electronic mode.

To take part in the Green Initiative, we would send documents like the notice convening theGeneral Meeting, Financial Statements, Annual Reports etc. and other communications inelectronic form, to the email addresses of those members which are available in the Registrarof Members of the Company. In case you desire hence-forth to receive documents in theelectronic form, kindly furnish your email address to the Company/ Registrar and participate insuch initiatives.

By order of the Board of Directors

Sd/-Rajesh Somani

(Chairman)Mumbai, 05th September, 2012

Registered Office:Shreeniwas House, Ground Floor, H. Somani MargMumbai - 400 001.


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DIRECTOR'S REPORT

To the Members of Volant Textile Mills Ltd.

Your Directors have pleasure in presenting the Seventeenth Annual Report for the year ended 31stMarch, 2012.

FINANCIAL RESULTS

(Rs. in lacs)Current Year Previous Year

Gross profit / (loss) beforeInterest depreciation & exceptional/Extra ordinary items 193.62 201.57Less: Prior Period Adjustments ----- (1.11)Less: Financial charges (33.33) (17.24)Less: Depreciation (118.99) (119.89)Net Profit / (Loss) 41.30 63.33

DIVIDEND

In view of accumulated losses, your directors do not recommend any dividend for the year underreview.

OPERATIONS

The Company has started taking orders for the mattress ticking industry and building a design databank for these products. A market research was conducted through M/s Technopak for the prospectsof tapping the mattress ticking industry. The results of the market research were positive and theCompany plans to develop this sector within technical textiles, in the near future.

The total sale during the year was Rs. 2,176.10 lacs (Rs. 1,865.98 lacs). This includes direct exportsales of Rs 219.07 lacs (Rs. NIL) and Rs.12.69 lacs (Rs. 328.16 lacs) made through merchant exporters.

Your Company has been certified for ISO 9001:2008 Quality Management Systems by GL SystemsCertification. The certification is valid till 23rd February, 2015.

REVIEW AND FUTURE PROSPECTS

The company was declared a sick industrial unit under section 3(1)(O) of SICA, 1985, by BIFR in caseno. 322/02 in March, 2006, and Bank of Baroda was appointed the Operating Agency. The Hon'bleBIFR held a hearing on 31st May, 2012 and has asked the Company to submit an updated schemewith the cut-off date as 31st March, 2012. The revised updated scheme of Rehabilitation is submittedto the OA and the OA will convene a creditors meeting as per the directive of BIFR, and then submitthe revised Draft Rehabilitation Report to the Hon'ble BIFR. The company has proposed the mergerwith another unit for manufacturing of technical textile products and the said merger is part of therehabilitation scheme submitted to the OA. All necessary permission and approval for the samewould be taken by the company at the appropriate time.

Unprecedented fluctuation in cotton and cotton yarn prices affected the working of the Company.


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The merger of the Company would bring about better synergies and value addition of its products.This would enable the company to enhance operations, improve efficiencies, provide economies ofscale, open up new and potential markets and thus unlock synergies to derive maximum valuationfor all stakeholders.

The Company has incorporated a 100% subsidiary in the name of Force Protective Solutions Pvt.Ltd. for developing textile and other products for supply to the armed forces.

OUTLOOK

Assuming the inflation is brought under control and input prices revert to a more moderate level,the domestic market is expected to continue to deliver a healthy growth. With stability in cottonprices, the overall business environment should turn positive. The directors are very optimistic ofthe textile trade and feel that with the pro-active government policies the Indian textile industry canhave a dominant share in the world trade after China. We are taking a long term view of theindustry and hope to increase turnover and margins from the current position. Simultaneously thecompany is exploring opportunities to venture into manufacturing of niche products, strengthenthe quality of its products and reduce the conversion cost. These initiatives are expected to positivelyinfluence the working of the company. However rising energy prices and increase in labour costsdue to hike in minimum wages will lead to increase in manufacturing costs.

DIRECTORS

At the ensuing Annual General Meeting, Mr. Rajesh Somani and Mr. S. Ramadoss Directors of theCompany, retires by rotation and being eligible offers himself for re-appointment. Mr. Rajesh Somaniand Mr. S. Ramadoss are Directors of the Company having vast experience in industry andadministration.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect tothe Director's Responsibilities Statement, it is hereby confirmed:

That in the preparation of the annual accounts, the applicable accounting standards have beenfollowed.

That the Directors have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year on 31st March 2012 and of theprofit/loss of the Company for that period;

That the Directors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of Companies Act, 1956 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities; and

That the Directors have prepared the annual accounts on a going concern basis as the Company hasstarted generating profits.


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AUDITORS

M/s Shah, Patani & Associates, Chartered Accountants, Mumbai, hold office until the conclusion ofthe forthcoming Annual General Meeting. They have expressed their willingness to continue asStatutory Auditors for the Financial Year 2012-13 and accordingly, a resolution proposing theirappointment is being submitted to the ensuing Annual General Meeting. The members are requestedto consider their reappointment for the current financial year 2012-13 and authorize the Board ofDirectors to fix their remuneration.

AUDITOR'S REPORT

The Notes on accounts, referred to in the Auditor's Report are self explanatory and therefore, do notcall for any further comments under Section 217(3) of the Companies Act, 1956.

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

As required under Section 217(1)(e) of the Companies Act, 1956 read with rule 2 of the Companies(Disclosure of particulars in the report of Board of Directors) Rules, 1988, information relating toConservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is annexedas Annexure "A" to Directors Report.

PUBLIC DEPOSITS

The Company has not accepted any deposit from the public within the meaning of Section 58A ofthe Companies Act, 1956 and the Rules made thereunder.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a certificate from the Auditor of the Companyregarding compliance of conditions of Corporate Governance as stipulated under clause 49 of theListing Agreement with Stock Exchanges, form part of the Annual Report.

LISTING

The equity shares of the company are listed on the Stock Exchange at Mumbai and Trading startedw.e.f 05th August, 2010. The Company had applied to get the shares delisted from Ahmedabadand Jaipur Stock Exchanges in the year 1999 in view of the nil trading there, but the delistingprocedure has not been completed. The Company hopes to get their shares delisted from Ahmedabadand Jaipur Stock Exchanges as per the provisions of SEBI (Delisting of Securities Guidelines), 2003,the Listing Agreement for which a Special Resolution was passed at the 12th Annual General Meetingof the Company. The company hopes that the Ahmedabad and Jaipur stock exchange would assistthe company in delisting its shares from their respective stock exchanges.

RISK MANAGEMENT

Today's business environment, remains challenging for the Corporate World and risk managementretains its high position on every organizations agenda. The Company has several risk factors whichcould potentially impact its business objectives, if not perceived and mitigated in a timely manner.


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The senior management team sets the overall tone and risk culture of the orgnisation throughdefined and communicated corporate values, clearly assigned risk responsibilities, appropriatelydelegated authority, and a set of process and guidelines. The Company has laid down procedures toinform the Board members about the risk assessment and risk minimization procedures. As anorganization, it promotes strong ethical values and high levels of integrity in all its activities, whichin itself is a significant risk mitigator.

With the growth strategy in place, risk management holds a key to the success of its journey ofcontinued competitive sustainability in attaining its desired business objectives.

PARTICULARS OF EMPLOYEES

There are no employees covered under the provisions of Section 217 (2A) of the Companies Act,1956, read with the Companies (particulars of the Employees) Rules, 1975 as amended.

INVESTOR SERVICES

In its endeavor to improve investor services, your Company has created an investor section on thewebsite www.volant-textile.com and has provided a dedicated email id for the members to lodgetheir complaints or suggestions.

ACKNOWLEDGEMENTS

Your Directors are pleased to place on record their sincere gratitude to financial institutions andbusiness constituents for their continued valuable co-operation and support to the Company duringthe year.

Your Directors thank the Shareholders, Banks, Customers, Vendors and other business associatesfor their confidence in the Company and its management and look forward to their continuedsupport.

Your Directors also wish to place on record their appreciation for the dedication with which theemployees at all levels performed their duties and for their cooperation and support in stabilizingthe production and quality.

On behalf of the Board of Directors

Rajesh Somani(Chairman)

Place: Mumbai,Date: 05th September, 2012


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ANNEXURE "A" TO DIRECTOR'S REPORT

Information as per Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosureof Particulars in the Report of Board of Directors) Rules 1988 and forming part of the Director'sReport for the year ended 31st March 2012.

I. CONSERVATION OF ENERGY

1) The company has made efforts to incorporate energy conservation measures in the installationstage itself.

2)Current Year Previous Year

Power & Fuel ConsumptionElectricity:Purchased Units (KWH) 13,97,195 13,25,335Total amount (Rs. In lacs) 53.55 44.26Rate/Unit (Rs.) 3.83 3.34Generated Power:Diesel Consumption (Ltrs) NIL NILTotal Amount (Rs. In lacs) NIL NILTotal Units Generated NIL NILCost Per Unit (Rs.) NIL NIL

3) The Company has installed a baggasse/ agro based boiler and has discontinued usage of LDObased boiler. This is more cost effective for the Company as well as reduces usage of fossil fuels.

4) Improvement in power factor and maintaining it near unity.

5) The Company has been using low wattage tubes and electronic ballast in its shed resulting inenergy savings.

II. TECHNOLOGY ABSORPTION

Research and Development (R&D)

1) Specific areas in which R&D carried out by the Company• Process parameter control through Quality Assurance by various testing methods to improve

productivity and fabric quality.• Strict quality control in grey fabric inspection area.• Process optimization/ recipe modification/ introduction of new chemicals for 'cost economy'.• Process standardization for consistent quality and meeting customer requirements.• New process development to overcome working problems in production department and

meeting marketing needs.


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• New product development for improved marketability of products.• New design development of creating facilities for providing world class designs of products

for the matters ticking sector.

2) Benefits derived as a result of above R&D• Improvement in product marketability and business viability through consistent quality,

lower cost and newer products.• Meeting customer needs and in turn customer satisfaction.• Introduction of new design development providing a larger product range, targeting

different market segments, better marketability and sale ability.

3) Future plan of action• New product development in Industrial market segment.• New marketing initiatives in technical textiles.• Exploring possibilities for getting its fabric processed outside and to develop marketing in

processed fabric which would lead to higher margins.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1) Efforts in brief, made towards technology absorption, adaptation and innovation:• Obtained ISO 9001:2008 certifications from GL Systems Certification.• Development of designs and creating of sample bank for its jacquard looms.

2) Benefits to be derived as a result of the above efforts:• Quality consistency due to process standardization/ optimization.• Cost reduction arising from process/ recipe modification in various operations.• Newer products and product range.• Product improvement.• Improved customer care and satisfaction.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO

Direct Foreign exchange earnings is Rs. 219.07 Lacs (Nil) and Third Party Exports is of the value of Rs.12.69 Lacs (328.16 Lacs). Outgo in current year is Nil (Nil).



Place: MumbaiDate: 05th September, 2012.


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REPORT ON CORPORATE GOVERNANCE

I. Company Philosophy on code of Governance

The Company philosophy on corporate Governance envisages transparency with integrity in all itsdealing with its stakeholder, employees, lenders and others and has incorporated a report oncorporate Governance in accordance with the revised clause 49 of the Listing Agreement enteredinto with the stock exchange.

II. Board of Directors

Board CompositionThe Composition of Board of Directors is as follows:

During the financial year 2011-2012 six Board meetings were held, the dates being 18th April,2011, 14th May, 2011, 10th August, 2011, 7th September, 2011, 15th November, 2011 and 15th

February, 2012. There was no gap of more than four months between any two meetings.

Code of Conduct

The Board of Directors had laid a code of conduct for its Board members and senior managementpersonnel.

All the members and senior management have affirmed compliance with the said code of conductfor the financial year ended 31st March, 2012. A declaration to this effect signed by Mr. RajeshSomani, Chairman, enclosed at the end of this report forms a part of Annual Report.

Name ofDirector

Mr. Atul B. Raval 4 Yes Independent Director 0 0

Mr. D.A. Tare 0 No Independent Director 0 0

Mr. R.J. Lade 6 Yes Independent Director 2 0

Mr. S. Ramadoss 0 No Independent Director 1 0

Mr. Rajesh Somani 5 Yes Chairman & Director 2 0

Mr. Anantvikram Somani 6 Yes Managing Director 5 0

No. ofBoard

meetingsAttended

Attendedat

PreviousAGM

No ofoutside

Director-shipheld

No ofmembership

ChairmanshipIn other board

Committees

Category


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Information given to the Board

The Board and Board Committees have complete access to the information. Such information issubmitted either as a part of the agenda papers in advance of the meetings or by way of presentationsand discussion material during the meetings. Such information inter alia includes the following:

• Quarterly results of the Company• Minutes of the meetings of various committees of the Board• Show cause, demand, prosecution notices and penalty notices which are materially important• Fatal or serious accidents, dangerous occurrences, any material effluent or material problems• Significant labour problems and their solutions• Non-compliance of any regulatory, statutory or listing requirements• Performance of the Company

Applicable provisions of law are being complied with by the Company.

III Committee of Board

Board CommitteesThe Board has constituted the following three Committees of Directorsa) Audit Committeeb) Shareholders / Investors Grievance & Share Transfer Committeec) Remuneration Committee

a) Audit Committee

The Audit Committee comprises of two non Executive Directors namely Mr. R.J. Lade (Chairman& Independent Director) Mr. D.A. Tare (Independent Director) and Mr. Rajesh Somani (PromoterDirector). Five meetings of the committee were held during the financial year 2011-2012. TheComposition and attendance of the members at the Audit Committee meetings is as follows:

Mr. R. J. Lade. Chairman of the Audit Committee was present at the Last Annual General Meetingheld on 30th September, 2011.

The broad terms of reference of this Committee are:

a. To oversee the Company's financial reporting process and the disclosure of its financialinformation to ensure that financial statement is correct, sufficient and credible.

b. Recommending to the Board, the appointment, the re-appointment and if required, thereplacement or removal of the statutory auditor and the fixation of audit fees.

c. Approval of payment to statutory auditors for any other services rendered by the statutoryauditors.

d. Reviewing, with the management, the annual financial statements before submission to theBoard for approval, with particular reference to:

Name

Mr. R. J Lade - Chairman & Independent Director 05

Mr. D. A. Tare - Independent Director 00

Mr. Rajesh Somani - Promoter Director 05

No. of Committee Meetings Attended


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1. Matters required to be included in the Director's Responsibility Statement to be includedin the Board's report in terms of clause (2AA) of section 217 of the Companies Act, 1956.

2. Changes, if any, in accounting policies and reasons for the same.3. Major accounting entries involving estimates based on the exercise of judgment by

Management.4. Significant adjustments made in the financial statements arising out of audit findings.5. Compliance with listing and other legal requirements relating to financial statements.6. Disclosure of any related party transactions.7. Qualification in the draft audit report.8. The going concern assumption.9. Any related party transactions.

e. Reviewing, with the management, the quarterly financial statements before submission tothe board for approval.

f. Reviewing, with the management, performance of statutory and internal auditors andadequacy of the internal control.

g. Reviewing of the adequacy of the internal audit function, if any, including the structure ofthe internal audit department, staffing and seniority of the official heading the department,reporting structure coverage.

h. Discussion with the internal auditors any significant findings and follow up there on.

i. Reviewing the findings of any internal investigations by the internal auditors into matterswhere there is any suspected fraud or irregularity or a failure of internal control systems of amaterial nature and reporting the matter to the Board.

j. Discussion with the statutory Auditors before the Audit commences, about the nature andscope for audit as well as cost control discussion to ascertain any area of concern.

k. To look into the results for substantial defaults in the payment to the depositories, debentureholders, shareholders (in case of non-payment of declared dividends) and creditors.

l. To carry out any other function as is mentioned in the terms of the reference of the AuditCommittee.

b) Shareholders/Investors Grievance & Share Transfer Committee

The Committee comprises of Mr. R.J. Lade (Chairman), Mr. D.A. Tare and Mr. Rajesh Somani. Five (5)meetings of the Committee were held during the financial year.

The composition and attendance at the meetings is as follows:

Name

Mr. R. J. Lade - Chairman & Independent Director 05

Mr. D. A. Tare - Independent Director 00

Mr. Rajesh Somani - Promoter Director 05

No. of Meetings Attended


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Terms of Reference

Its terms of reference include review of complaint of shareholders/ investors, the Company'sperformance on redressal of complaint and look into the correspondence with Securities & ExchangeBoard of India (SEBI) and the stock exchange concerning Investors Complaints and to note theshare transfer.

The committee would also like to inform the shareholders that the face value of the shares has beenchanged from Rs. 10/- to Re. 1/- with effect from 02nd June, 2011 and the new ISIN for the same isINE962D01025.

Name and designation of Compliance officer

Mr. Anantvikram Somani, Managing Director of the Company.

Status of Complaints received for the year 2011-2012

During the year 2011-12, the Company has not received any complaint from investors. The samewas also verified on the SCORES site, an initiative by the SEBI. No Complaint was received throughSEBI and listing fees of Bombay Stock Exchange has been paid.

c) Remuneration Committee

The Remuneration Committee consists of three Directors namely; Mr. R.J. Lade, Mr. D.A. Tare andMr. Rajesh Somani. No meeting was held during the financial year.

The broad terms of reference of this Committee are:

• To review and determine the Company's Policy regarding remuneration payable to Managingand Whole time Directors;

• To fix their remuneration within the limits laid down under the Companies Act, 1956.

Details of Remuneration paid to Directors during the year ended 31st March, 2012

Name Sitting fees Salaries Total

Mr. Rajesh Somani 15000 Nil 15000

Mr. Anantvikram Somani Nil 720000 720000

Mr. R. J. Lade 16000 Nil 16000

Mr. D. A. Tare Nil Nil Nil

Mr. Atul Raval 4000 Nil 4000

Mr. S. Ramadoss Nil Nil Nil


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IV. General Body Meetings:

Annual General Meetings:

YEAR DATE LOCATION TIME

2009 26/09/2009 Shreeniwas House, 2nd Floor,H. Somani Marg, Fort, Mumbai 400001 10.30 a.m.



Details of special resolutions passed at any of the previous three Annual General Meetings /Extra Ordinary General Meetings :

No special resolution was passed through postal ballot at the last Annual General Meeting.No special resolution is proposed through postal Ballot at the forthcoming Annual General Meeting.

YEAR AGM/EGM DATE Special resolution passed

2009 AGM 26.09.2009 1) To re-appoint Mr. Atul B. Raval as Director.

2010 AGM 30.09.2010 1) To re-appoint Mr. D.A. Tare as Director.2) To Appoint Mr. S. Ramadoss as

Additional Director.3) To increase Authorised Share Capital to

Rs. 12,50,00,000/- (U/s 94(1))4) To alter MOA and AOA (U/s 16 & 31(1))5) To issue and allot 25, 00,000 equity shares

on preferential basis.(u/s 81(1A))6) To authorized the Board of Directors to borrow

money not exceeding Rs. 70 Crores.(U/s 293(1)(d))

2010 EGM 27.11.2010 1) To offer /issue and allot not more than25,00,000 convertible warrants. (U/s 81( 1A)

2011 EGM 16.05.2011 1) Sub-division of Equity Shares from face value ofRs. 10/- to Rs. 1/- per share.

2) To issue new shares to Shareholders3) To alter Article 3 of AOA

2011 AGM 30.09.2011 1) To re-appoint Mr. Atul B. Raval and Mr. R.J. Ladeas Directors.

2) To appoint M/s Shah, Patani & Associates asAuditors.

3) To appoint Mr. Anantvikram Somani as theManaging Director and fix his remuneration.


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V. Disclosures

a) As disclosed in the accompanying accounts, wherever required full provision has been maderelating to transactions with associate companies.

b) There were no instance of non compliance of by the company, nor were any penalties imposedon the company by Stock Exchange, SEBI or any statutory authority on any matters related tocapital market during the last three years.

c) All the mandatory items of clause 49 have been complied with and covered in this report.

VI. CEO/CFO Certification

The CEO certification of the financial statements and the cash flow statements for the financial yearended March 31, 2012 issued to the Board of Directors is enclosed at the end of this Report andforms part of this Annual Report.

VII. Note on appointment or re-appointment of Directors

Particulars of Directors need to appointed/ re-appointed at the ensuing Annual General Meeting isgiven under Note No. 2 of the Notice convening the meeting.

VIll. Means of Communication

During the year, Quarterly results were published in the Free Press Journal (English Daily) and Navshakti(Marathi Daily).

Management discussion and analysis is part of the Annual Report of the Director to the Shareholdersof the Company.

IX. GENERAL INFORMATION FOR THE SHARE HOLDERS

a) Annual General Meeting

Date & Time : 29th September, 2012, 10.30 a.m.

Venue : Registered office of the Companyat Shreeniwas House, Mumbai-400 001

Financial Year : 1st April 2011 to 31st March 2012

Date of Book Closure : 24th September, 2012 to 29th September, 2012(both days inclusive)

Listing on Stock Exchange : Bombay Stock Exchange LimitedP. Jeejeebhoy Towers, 25th Floor,Dalal Street, Mumbai - 400 001

Stock Code : 531865.

ISIN No. : INE962D01025.


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Delisting on Stock Exchanges

The Company had applied for delisting in the Jaipur & Ahmedabad Stock Exchanges in the year1999 in view of nil trading there, but the delisting procedure has not been completed. The Companyhopes to get their shares delisted from Ahmedabad and Jaipur Stock Exchanges as per the provisionsof SEBI (Delisting of Securities Guidelines), 2003, the Listing Agreement for which a Special Resolutionwas passed at the previous Annual General Meeting on 15th September, 2007.

Market Price Data & Share Price Performance

Registrar & Share Transfer AgentM/s Bigshare Services Pvt. Ltd.E-2/3 Ansa Industrial Estate,Saki Vihar Road, Saki Naka,Andheri (E), Mumbai 400072.

Share Transfer System

Applications for transfer of shares in physical form are sent directly to the transfer agent and theshare transfer instruments received in physical form are processed and share certificate returnedwithin 30 days from the date of receipt, subject to the documents being valid and complete in allrespects. During the year 1025000 shares were dematerialized. Totally 68535000 shares have beendematerialized up to 31st March, 2012.

Shareholding Pattern as at 31st March, 2012

(In Rupees)

Month High Low Month High Low

Apr 11 77.00 61.10 Oct 11 3.12 2.27

May 11 64.45 27.45 Nov 11 2.90 1.72

Jun 11 3.72 2.58 Dec 11 2.80 1.73

Jul 11 3.21 2.07 Jan 12 1.99 1.34

Aug 11 3.55 2.00 Feb 12 1.74 1.37

Sep 11 3.44 2.13 Mar 12 3.30 1.35

The shares have been sub-divided w.e.f. 2nd June, 2011 from Face Value of Rs. 10/- to Face Value ofRe.1/- per share.

Category No of shares held % of share holding

Promoters 44106000 58.84

Persons acting in concert 7500000 10.01

Others (NRI's, OCB's) 1786800 2.38

Others FI's 100000 0.13

Bodies Corporate 7373254 9.84

General Public 13338946 17.80

Public Financial Institution 750000 1.00

Total 7,49,55,000 100


19

Type of Holding

Physical 8.57

Demat 91.43

Total 100.00

Percentage to share capital

Distribution of Shareholding as at 31st March, 2012

No of shares No of share % of Total Share Amount % of Total shareholders share holders in (Rs.) Capital

1-5000 825 67.57 14,98,039 2.00

5001-10000 166 13.59 14,97,396 1.99

10001-20000 77 6.31 12,05,793 1.61

20001-30000 40 3.27 9,92,896 1.32

30001-40000 15 1.23 5,43,757 0.73

40001-50000 24 1.97 11,50,851 1.54

50001-100000 22 1.80 18,06,463 2.41

100001 and Above 52 4.26 6,62,59,805 88.40

Total 1221 100.00 7,49,55,000 100.00

Dematerialization of Shares

The Company's shares can be dematerialized in CDSL and also in NSDL w.e.f. 20/04/2010. The shareshave been sub-divided w.e.f. 02nd June, 2011 from face value Rs.10/- to face value Re 1/- per share.The new share certificates were directly dispatched by our transfer agent M/s Bigshare ServicesPvt. Ltd. to all members of the company who held the shares in physical form.

The Company's ISIN No. has changed from INE962D01017 to INE962D01025 w.e.f 03rd June 2011.

Plant LocationK -56, MIDC Chincholi,Solapur - 413255. Maharastra.

Investors Correspondence for transfer/dematerializationM/s Bigshare Services Pvt. Ltd.E-2/3 Ansa Industrial EstateSaki Vihar Road, Saki NakaAndheri (E), Mumbai 400072.E-mail : [email protected]


20

General CorrespondenceManaging DirectorVOLANT TEXTILE MILLS LIMITEDShreeniwas House, Gr. Floor,H. Somani Marg,Mumbai-400 001E-mail: [email protected]

Compliance Certificate

The Certificate of Compliance with the requirement of Corporate Governance as issued By M/sShah, Patni & Associates; Auditors of the Company and is annexed.

Qualification in Auditors Report

The directors in their report have given explanation to all qualification raised by auditor & are takingnecessary step to improve on the same.



Place: MumbaiDate: 05th September, 2012


21

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER IN TERMS OF CLAUSE49 (V) OF THE LISTING AGREEMENT WITH THE STOCK EXCHANGE

I, Anantvikram Somani, Managing Director of the Company hereby certify that for the financial yearending 31st March, 2012 on the basis of the review of the financial statements and the cash flowstatement and to the best of our knowledge and belief that:

1) These statements do not contain any materially untrue statement or omit any material fact orcontain statements that might be misleading.

2) These statements together present a true and a fair view of the Company's affairs and are incompliance with existing accounting standards, applicable laws and regulations

3) There are to the best of our knowledge and belief no transactions entered into by the Companyduring the year 2011-12 which are fraudulent, illegal or violative of the Company's Code ofConduct.

4) We accept responsibility for establishing and maintaining internal controls. We have evaluatedthe effectiveness of the internal control systems of the Company. We have disclosed to theAuditors and the Audit Committee, deficiencies, if any, in the design or operation of such internalcontrol of which we are aware and the steps that we have taken or proposed to take to rectifythis deficiencies.

5) We have disclosed based on our most recent evaluation wherever applicable to the Company'sAuditors and Audit Committee of the Company's Board of Directors that:

a) there have been no significant changes in the internal control during this year;

b) there have been no significant changes in the accounting policies during this year;

c) there have been no instances of significant fraud of which we have become aware and theinvolvement therein, of the management or an employee having significant role in thecompany's internal control system.

6) We affirm that we have not denied any personnel access to the Audit Committee of the company(in respect of matters involving misconduct, if any)

7) We further declare that all Board members and Senior Management have affirmed compliancewith the Code of Conduct for the current year.

On behalf of the board of Directors

Anantvikram Somani(Managing Director)



22

MANAGEMENT DISCUSSION AND ANALYSIS

1) Global Business Environment

In the year 2011-12, multiple economic events impacted the Global economy. These includehigh crude oil prices, bailouts for some countries which are part of the European Union,downgrading of the US sovereign debt, reduction in the debt rating of Italy and cut in theEurozone interest rates to 3%. On the positive side, Japan is recovering from the nuclear reactoraccident and disruption in the supply chains due to floods in Thailand, have been restored. Thefinancial condition of the large global corporations is extremely strong and their cash holdingsare at an all time high.

During the year, emerging economies grew at about 6.2% followed by advance economies at1.6%. The road ahead is still not smooth as the markets in Europe remain jittery. Unemploymentand inequality in income levels is a growing concern. Political gridlock in many countries willhamper growth of the economies.

In FY 2011-12, India's GDP grew at 6.9% compared to an average growth of 8.7% from 2005-06to 2010-11. Manufacturing activity was subdued due to monetary tightening, weak externaldemand and lack of investment activity. A high interest burden reduced the profit growth of thecorporate sector. The rupee depreciated by about 8%. High inflation continues to remain aconcern.

2) Industry Structure and Development

The textile industry in India plays a vital role in the overall economy. The Indian textile industry isone of the largest in the world with a massive raw material and manufacturing base. It contributes14% of the industrial production and 4% to the GDP of the country. The textile industry accountsfor as large as 21% of the total employment generated in the economy. Approximately 35 millionpeople are directly employed in textile manufacturing activities. Exports account for about 16%of India's total foreign exchange earnings and it continues to reel under the pressure of thecurrent slowdown.

The Indian textile industry has witnessed a year confronting many challenges. Cotton pricesreached an all time high followed by a phase of correction. Textile products from Bangladeshpermitted to be imported duty free are cheaper and have flooded the markets, pushing outIndian products with cheaper prices. The Indian textile industry is thus passing through an adversephase although the future would be more optimistic if input costs, including the cost of rawmaterial and interest, could remain generally stable.

Confederation of Indian Textile Industry (CITI) has said that the sector wil touch 100 billion $ by2015. In 2009, the textiles and clothing industry was worth 55 billion$.

With stable cotton prices, the overall business situation appears to be positive. If the inflation isbrought under control and monetary easing is done, the domestic market could deliver a modesttopline growth.


23

3) Opportunities, Threats, Risks & Concerns

The weakest links in the Indian textile industry are the weaving & the processing sector. Investmentin these sectors will enhance the export prospects in the made-up & garment sectors. The country'shome textile exports are forecasted to rise to $ 8-10 billion from $ 1.5 billion now. China at 38%,Pakistan at 22% and India at 16% dominate the U.S. export market despite cost pressures &cutthroat competition.

The concerns are the increase in interest costs, high power costs, delays in policies relating tolabour laws, lack of infrastructure and high bank transaction costs. The Textile industry, especiallyspinning has seen unprecedented volatility in cotton and yarn prices not seen in the last twodecades. This has adversely affected the entire spectrum of people associated with the industrylike ginners, traders and manufacturers. Being the second largest provider of employment, theGovernment needs to urgently initiate steps to revive the industry. The state Government hasalso raised the minimum wages a few times during the year.

India has been a leader in cotton yarn exports for many years, and it was expected that wewould move the textile chain upwards, however we have slid down to export of cotton. One kgof cotton might yield Rs. 70, as against a potential of Rs. 500 for a finished cotton textile product.A policy decision needs to be taken whether it is advantageous to have maximum value additionand increased employment while forming the policy for raw material exports. The Government,to encourage exports, should have higher duty drawbacks for every value added stage. This willhelp in increasing further employment in the sector and result in increase in higher foreignexchange inflows. The Government policies and direction are most essential for a massive growthin this sector in the coming years.

In the export market, demand is expected to pick up in USA, slowdown continues in Europewhich could have an adverse impact on our business. Your Company is focusing on a long termsustainable profit model, and expects positive growth in the years to come. At the samecompetition from China, Pakistan and other Indian manufacturers continue to be a threat forthe Company.

The Indian domestic market has also supported the industry due to the increased disposableincome in the hands of the middle class. However, the demand could get hampered due to thesevere inflationary pressures and high interest rates. The conversion costs could sharply escalatedue to increase in energy prices and labour costs due to hike in minimum wages. Cotton priceswhich have been highly volatile are of major concern for textile manufacturers.

In the International Market, cost competitiveness is crucial. Any adverse policy measures couldimpact exports. Also a stronger Rupee would erode export realizations. Experts are of the opinionthat Chinas dominance in the textile trade has reached its zenith and the base is now graduallyshifting to India and Pakistan.


24

4) Outlook

Please refer to Directors' Report.

5) Financial and Operational Performance

Please refer to Directors' Report.

6) Material Developments in Human Resources / Industrial Relation Front

The Company's relations with the labour are cordial. The Company has a 5 year agreement withthe workmen from 1st September, 2007 up to 31st August, 2012 and hopes to extend the samefor a further period of 5 years with mutual consent.


Rajesh Somani

(Chairman)

Place: Mumbai

Date: 05th September, 2012.


25

AUDITOR'S CERTIFICATE

TO THE MEMBERS OF,VOLANT TEXTILE MILLS LTD.

1. We have reviewed the implementation of Corporate Governance procedures by Volant TextileMills Ltd. during the year ended on 31st March, 2012, with the relevant record and documentsmaintained by the Company, furnished to us for our review and the report on CorporateGovernance as approved by the board of directors.

2. The compliance of condition of Corporate Governance is the responsibility of the management.Our examination was limited to review the procedure and implementation hereof, adopted bythe Company for ensuring the compliance with the condition of Corporate Governance. It isneither an audit nor an expression of opinion on the financial statement of the Company. Wefurther state that such compliance is neither an assurance as to the future viability of the Companynor the efficiency or effectiveness with which the management has conducted the affairs of thecompany.

3. As required by the guidance note issued by the Institute of the Chartered Accountants of India,we have to state that, based on the report given by the management of the company to theInvestors Grievance Committee, as on 31st March, 2012 there were no investor grievance mattersagainst the company remaining unattended/ pending for more than 30 days.

4. On the basis of our review and according to the information and explanation given to us, and therepresentation made by the directors and the management, on the matters of CorporateGovernance, as stipulated in clause 49 of the listing agreement with the stock exchange havebeen complied with in all material respect by the Company.

For SHAH PATANI & ASSOCIATES(Chartered Accountants)

DHARMEN B. SHAH(Partner)

Membership No:036324Firm No. 121252W

Place: Mumbai

Date: 05th September, 2012.


26

AUDITOR'S REPORTToThe Members,

VOLANT TEXTILE MILLS LTD.

1. We have audited the attached Balance Sheet of Volant Textile Mills Limited as at 31st March,2012, the relative Profit and Loss Account for the year ended on that date annexed thereto andthe Cash Flow Statement for the year ended on that date, which we have signed under referenceto this report. These financial statements are the responsibility of the Management of theCompany. Our responsibility is to express an opinion on these financial statements based on ouraudit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India.Those Standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significantestimates made by the Management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

3. The accounts are prepared on the principle application to a going concern despite heavy losseswhich have totally eroded the net worth of the Company. The Company has been declared Sickby BIFR having case No. 322/02 in the hearing held on 1.3.2006

4. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Governmentof India in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checksof the books and record of the Company as we considered appropriate and according to theinformation and explanations given to us during the course of audit, we enclose in the Annexure,a statement on the matters specified in paragraphs 4 and 5 of the said order to the extentapplicable.

5. Further to our comments in the Annexure referred to in Paragraph 4 above, we report that:

a) Subject to remarks in Para d, e & f below, we have obtained all the information and explanationwhich to the best of our knowledge and belief were necessary for the purpose of our audit.

b) In our opinion, proper books of account as required by law have been kept by the companyso far as appear from our examination of those books.

c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by thisreport are in agreement with the Books of Account.

d) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealtwith by this report have been prepared in compliance with the applicable accounting standardsreferred to in Section 211 (3C) of the Act except AS-2 relating to Valuation of Inventories, AS21 relating to Consolidation of Accounts and AS 26 relating to Intangible Assets.

(i) AS-2 : The inventory valuation of Rs.20,894,761 is accepted by us on the basis of certificateof the management in the absence of working papers relating to its physical verificationand also absence of Internal Auditors confirmation relating to its quantity and value.


27

(ii) AS-21: The Company has not consolidated the accounts of its subsidiary M/s Force ProtectiveSolutions Private Limited as on 31.03.2012.

(iii) AS-26: The other non-current assets include Miscellaneous Expenditure amounting to Rs17,42,470/- which we believe is of no tangible value as on the date of Balance Sheet.

(e) Attention is also invited to valuation of Trade Receivables of Rs 60,947,284 out of whichaccording to us Rs 21,385,985 are doubtful of recovery & for which no provision for Bad &Doubtful debts has been made in the Financial Statements prepared for the year ended 31stMarch, 2012.

(f) (i) Para B (2) (i, ii & iii) on Note No.1 relating to amount payable to various Governmentauthorities and the amount payable for pending assessment if any being unascertainable.

(ii) Para B (4) on Note No.1 regarding non-confirmation of balance of Unsecured Loans, SundryDebtors, Sundry Creditors, Current Liabilities and Loans and Advance.

(g) On the basis of written representations received from the Directors and taken on record bythe Board of Directors of the Company, none of the Directors are disqualified as on March 31,2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section274 of the Act.

(h) In our opinion and to the best of our information and according to the explanations given tous, the Balance Sheet, Profit and Loss Account and the Cash Flow statement together withthe Notes thereon and annexed thereto given in the prescribed manner, subject to note 5(d),(e) & (f) above and Para 14 on Note 1(B) regarding non-availability of information as to thestatus of registration of suppliers as small scale industrial undertakings and other relatednotes referred to therein with consequential effects on the Company’s profit for the year andthe relevant items on the Balance Sheet, we are unable to comment whether the accountsgive a true and fair view at this stage, in conformity with the accounting principle generallyaccepted in India;

• In the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2012

• In the case of Profit and Loss Account, of the profit for the year ended on that date; and

• In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.


DHARMEN B. SHAHPartner

Membership No.: 036324Firm No.: 121252W



28

ANNEXURE TO THE AUDITORS' REPORT(Referred to in paragraph 4 of our report of even date)

1. a) The company has not maintained the statements showing full particulars including quantitativedetails and situation of most of its fixed assets.

b) As explained to us, the fixed assets of the Company are physically verified by the managementduring the year. In the absence of information relating to periodicity of verification we areunable to comment on reasonableness & adequateness of verification commensurate to thesize of the Company and the nature of its assets. According to the information and explanationsgiven to us, no discrepancies have been noticed on such verification.

c) No substantial part of the fixed assets have been disposed of during the year.

2. a) As explained to us, the inventory has been physically verified by the management during theyear. In the absence of information we are unable to comment on the frequency & adequatenessof verification and also on the procedure of verification.

b) In our opinion and according to the information and explanations given to us, the Companyis maintaining proper records of inventory. The discrepancy noticed on verification, betweenthe physical stocks and the book records were not material.

3. In respect of unsecured loans taken by the Company from companies, firms, or other partiescovered by the register maintained under section 301 of the Companies act, 1956, and accordingto the information and explanations given to us:a) The Company has taken interest free unsecured loans from promoters. As at the year end, the

outstanding balance of such loans aggregated to Rs. 1296.07 lacs. The maximum amountoutstanding during the year, aggregated to Rs. 1673.00 lacs.

b) The Company has given interest free unsecured loans to one company. As at the year end, theoutstanding balance of such loans aggregated to Rs. NIL lacs. The maximum amountoutstanding during the year, aggregated to Rs. 252.82 lacs.

c) The interest free loans in our opinion, prime facie, are not prejudicial to the interest of thecompany.

d) No stipulation has been made with regard to repayment of loans taken and payment ofinterest on such loans taken, hence we cannot comment on the clause.

4. In our opinion, and according to the information and explanations given to us, internal controlprocedures requires to be further strengthened commensurate with the size of the Companyand the nature of its business, for the purchase of inventory and fixed assets and for the sale ofgoods.

5. According to the information and explanations given to us, we are of the opinion that companyhas not maintained the Register u/s 301 of the Companies Act, 1956.

6. Accordingly to the information and explanations given to us, the Company has not accepteddeposits from the public within the meaning of Section 58A and 58AA of the Companies Act,1956 and the rules framed there under.

7. The Company has an internal audit system, however it requires to be strengthened to becommensurate with its size and nature of business.


29

Sr. Authority Amount Period to Dispute Pending at DepositsDisputed which the made

(Rs. In lacs) amount relates (Rs. In lacs)

1 Excise Duty 151.52 2000-2001 Appellate Tribunal 15.00

2 Excise Duty 4.88 2005-2006 Jt. Commissioner, Pune 1.00

3 Income Tax Note 1 2002-2003 Appellate Tribunal Nil

8. As per the information & explanation given to us, Cost records prescribed by the CentralGovernment under Section 209(1)(d) of the Companies Act,1956 have not been maintained bythe company.

9. a) According to the information and explanations given to us and according to the books andrecords of the Company as produced and examined by us, in our opinion, the undisputedstatutory dues, including provident fund, income tax, and professional tax have been depositedgenerally regularly by the company during the year with appropriate authorities. There areno arrears of statutory dues as mentioned above as at 31st March, 2012 for a period morethan six months.

b) As at 31st March 2012, according to the records of the company and the information andexplanations given to us, the following are the particulars of disputed dues on account ofstatutory dues that have not been deposited:

Note 1: The amount disputed is depreciation of Rs. 45.61 Lacs which was attributed to increase invalue of assets on account of foreign exchange fluctuation.

10. In our opinion, the accumulated losses of the Company are more than fifty percent of its networth as at 31st March 2012. The Company has not incurred cash losses during the financialyear and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company hasduring the year not defaulted in repayment of Secured Loan for vehicles obtained from Banks.

12. According to the information and explanations given to us, and based on the documents andrecords produced to us, the company has not granted any loans and advances on the basis ofsecurity by way of pledge of shares, debentures and other securities.

13. The company is not a chit fund/nidhi/mutual benefit fund/society. Therefore, the provision ofclause 4 (xiii) of the order are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the company isnot dealing in or trading in shares, securities, debentures and other investments. Accordinglythe provision of clause 4 (xiv) of the order are not applicable to the Company.


30

15. In our opinion and according to the information and explanations given to us, the Company hasgiven guarantee for entering into a marketing tie-up whereby the company will get exclusivemarketing rights for sale of the products in India.

16. In our opinion and according to the information and explanations given to us, the Company hastaken Term Loan from Banks & they have been applied for the purpose for which they wereobtained.

17. According to the information and explanations given to us and on overall examination of theBalance Sheet and Cash Flow Statement of the Company, we report that no funds raised onshort term basis have been used for long term investments.

18. In our opinion and according to the information and explanations given to us, the Company hasnot made any preferential allotment of shares to parties and companies covered in the registermaintained under section 301 of the Companies Act, 1956, during the year.

19. The Company has not issued any debentures during the year.

20. The company has not raised any money by public issue during the year.

21. To the best of our knowledge and according to the information and explanations given to us,no fraud on or by the company has been noticed or reported by the Management during theyear.


DHARMEN B. SHAHPartner

Membership No.: 036324Firm No.: 121252W



31

In terms of our report attached.

For SHAH PATANI & ASSOCIATES

Chartered Accountants

DHARMEN B. SHAH

Partner

Member No. 036324

Firm No. 121252W

Place : Mumbai, Date : 5th September, 2012

BALANCE SHEET AS AT 31ST MARCH 2012

Particulars

A EQUITY AND LIABILITIES

1 Shareholders’ funds

(a) Share capital 2 74,955,000 74,955,000

(b) Reserves and surplus 3 (121,812,384) (125,942,567)

(46,857,384) (50,987,567)

2 Non-current liabilities

(a) Long-term borrowings 4 167,091,353 185,397,625

(b) Long-term provisions 5 1,348,794 1,147,160

168,440,147 186,544,785

3 Current liabilities

(a) Short-term borrowings 6 89,952 5,990,290

(b) Trade payables 7 56,911,838 52,727,907

(c) Other current liabilities 8 10,585,234 4,321,127

(d) Short-term provisions 9 2,440,165 1,440,723

70,027,189 64,480,047

TOTAL 191,609,952 200,037,265

B ASSETS

1 Non-current assets

(a) Fixed assets

(i) Tangible assets 10 96,249,106 107,897,647

(b) Non-current investments 11 490,000 ------

(c) Long-term loans and advances 12 6,947,669 5,673,205

(d) Other non-current assets 13 1,742,470 1,742,470

9,180,139 7,415,675

2 Current assets

(a) Inventories 14 20,894,761 18,873,188

(b) Trade receivables 15 60,947,284 64,199,026

(c) Cash and cash equivalents 16 (277,952) (2,211,851)

(d) Short-term loans and advances 17 181,028 411,339

(e) Other current assets 18 4,435,586 3,452,240

86,180,707 84,723,943

TOTAL 191,609,952 200,037,265

See accompanying notes forming part

of the financial statements

Note

No.

As at 31 March 2012

`̀̀̀̀

As at 31 March 2011

`̀̀̀̀

For and on behalf of the Board

Rajesh Somani Anantvikram Somani

Chairman Managing Director


32

In terms of our report attached.



DHARMEN B. SHAH

Partner

Member No. 036324

Firm No. 121252W


STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED 31ST MARCH 2012

Particulars

I Revenue from Operations 19 217,385,391 186,598,467

II Other Income 20 2,080,766 954,325

III Total Revenue (I + II) 219,466,157 187,552,792

IV Expenses

Cost of Materials consumed 21 172,939,117 135,996,276

Changes in inventories of finished goods,

work-in-progress 22 (6,723,175) 752,741

Employee benefits expense 23 13,171,622 11,478,876

Finance costs 24 4,707,720 1,834,366

Depreciation and amortization expense 10 11,899,217 11,989,167

Other expenses 25 19,341,472 19,168,896

Total Expenses 215,335,972 181,220,323

V Profit Before Tax 4,130,185 6,332,469

VI Tax Expense: ------ -----

VII Profit for the year 4,130,185 6,332,469

VIII Earning per Equity Share: 31

- Basic 0.06 0.84

- Diluted 0.06 0.84

Note

No.

As at 31 March 2012

`̀̀̀̀

As at 31 March 2011

`̀̀̀̀





33

2.2 The details of shareholders holding more than 5% shares:

Name of the Shareholder

Equity shares with voting rights

Rajesh Somani HUF 10,810,000 14.42 891,500 11.89

Jyoti Somani 10,740,000 14.33 1,074,000 14.33

Anantvikram Somani 9,916,000 13.23 871,600 11.63

Nal Properties Pvt. Ltd. 7,500,000 10.01 750,000 10.01

Rajesh Somani 6,436,000 8.59 585,000 7.80

As at 31 March 2012

No. of Shares of Re.1/- each % held

As at 31 March 2011

No. of Shares of Re.10/- each % held

Particulars

Equity shares with voting rights

Year ended 31 March, 2012

- Number of shares 7,495,500 ----- 74,955,000 74,955,000

- Amount 74,955,000 ----- 74,955,000 74,955,000

Year ended 31 March, 2011

- Number of shares 7,495,500 ----- ----- 7,495,500

- Amount 74,955,000 ----- ----- 74,955,000

Sub-divided Paid-up

Value Re.1Closing Balance

2.1 Reconciliation of the number of shares and amount outstanding at the beginning and at the

end of the reporting period:

Opening

Balance

Fresh

Issue

NOTES FORMING PART OF THE FINANCIAL STATEMENTS

Particulars

2. SHARE CAPITAL

AUTHORISED

125,000,000 (12,500,000)* Equity Shares of

Re. 1/- (Rs 10/-) each with voting rights 125,000,000 125,000,000

ISSUED & SUBSCRIBED CAPITAL

75,000,000 (7,500,000) Equity Shares of


SUBSCRIBED & FULLY PAID UP

74,955,000 (7,495,500) Equity Shares of


* Figures in brackets relate to the previous year.

As at 31 March 2012

`̀̀̀̀

As at 31 March 2011

`̀̀̀̀

Note

No.


34

Particulars

3. RESERVES & SURPLUS

3.1 CAPITAL RESERVE 22,500 22,500

3.2 SURPLUS IN STATEMENT OF PROFIT AND LOSS

As per last balance sheet (125,965,069) (132,297,536)

Add : Profit for the year 4,130,185 6,332,469

(121,834,884) (125,965,067)

Total (121,812,384) (125,942,567)

4. LONG TERM BORROWINGS

4.1 Secured Loans

(i) Term Loan :

From Banks :

(Secured against Fixed Deposit from Promoters) ------ 15,612,026

From Banks : Vehicle Loan :

(Secured Against Hypothecation of Vehicles) 909,369 130,198

(ii) Unsecured Loans

Long Term maturities of Finance Lease Obligation 8,286,682 8,286,682

Loan from Related Parties 129,806,861 144,873,844

Other Loans (Intercorporate Loans) 28,088,441 16,494,876

167,091,353 185,397,625

5. LONG TERM PROVISIONS

5.1 Provision for Employee Benefits :

5.2 (i) Provision for Compensated Absences 868,207 666,573

5.3 (ii) Provision for Gratuity 480,587 480,587

1,348,794 1,147,160

CURRENT LIABILITIES

6. SHORT TERM BORROWING

6.1 Unsecured Loans

(i) Other Loans 89,952 5,990,290

89,952 5,990,290

7. TRADE PAYABLES

7.1 (i) For Goods 53,246,042 49,196,729

7.2 (ii) For Expenses 2,708,760 1,871,940

7.3 (iii)For Capital Goods 957,036 1,659,238

56,911,838 52,727,907

8. OTHER CURRENT LIABILITIES

8.1 (i) Current Maturities of Long Term Debit 428,484 ------

8.2 (ii) Statutory dues payable 711,781 1,036,861

8.3 (iii) Advances from customers 9,444,969 3,284,266

10,585,234 4,321,127

9. SHORT TERM PROVISION

9.1 (i) Provision for employee benefits

Provision for Bonus 348,836 ------

9.2 (ii) Provision for Expenses 2,091,329 1,440,723

2,440,165 1,440,723

As at 31/03/2011

`̀̀̀̀

As at 31/03/2012

`̀̀̀̀

Note

No.

VO

LA

NT T

EX

TIL

E M

ILLS L

IMIT

ED

35

Tangible

1 Leasehold Land 455,700 - - 455,700 76,760 4,740 - 81,500 374,200 378,940

2 Factory Building 3.34% 40,079,176 - - 40,079,176 17,288,329 1,338,644 - 18,626,974 21,452,202 22,790,845

3 Plant & Machinery 5.28% 195,168,056 41,500 3,500,813 191,708,743 112,276,204 10,248,929 2,428,326 120,096,807 71,611,936 82,891,852

4 Furniture & Fixtures 6.33% 2,016,552 - - 2,016,552 1,017,235 127,648 - 1,144,882 871,670 999,318

5 Vehicles 9.50% 951,470 1,490,664 379,470 2,062,664 310,114 140,958 170,470 280,602 1,782,062 641,357

6 Office Equipment 6.33% 605,021 - - 605,021 409,686 38,298 - 447,984 157,037 195,335

7 Computer 16.21% 724,189 - - 724,189 724,189 - - 724,189 - -

Grand Total 240,000,164 1,532,164 3,880,283 237,652,045 132,102,518 11,899,217 2,598,796 141,402,939 96,249,106 107,897,647

Previous Year (239,799,585) (247,499) (46,921) (240,000,163) (120,113,350) (11,989,167) - (132,102,518) (107,897,647) (119,686,236)

NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2012

(in `)NOTE : 10 FIXED ASSETS

ParticularsSr.

No.

Rate

(%)

Gross Block Depreciation Net Block

As At

1-4-2011

Additionsduring the

year

Deductionsduring the

year

As At

31-3-2012

As At

1-4-2011

Provided for

the yearDeductionsduring the

year

As At

31-3-2012

As At

31-3-2012

As At

31-3-2011

Note : The Lesehold land is acquired from MIDC for a Lease period of 95 years.


36

NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31/03/2012

Particulars

11. NON CURRENT INVESTMENTS 490,000 -----

11.1 Investment in Equity Instruments

(i) of Subsidiaries

Particulars Quoted Unquoted

Force Protective Solutions Pvt Ltd

49000 Equity Shares of Rs 10/- each

fully paid up ---- 490,000 490,000 -----

12 LONG TERM LOANS AND ADVANCES

12.1 Unsecured, considered good

Security Depsoit 2,807,639 2,802,639

Advance Income Tax (Net of Provisions) 249,753 582,561

Balance with Statutory / Government Authorities 3,890,277 2,288,005

6,947,669 5,673,205

13. OTHER NON-CURRENT ASSETS

13.1 Miscellaneous Expenditure

(Project expense pending capitalisation) 1,742,470 1,742,470

1,742,470 1,742,470

CURRENT ASSETS

14. INVENTORIES

(As certified by the Management)

(At lower of cost or net realisable value)

14.1 (i) Raw Materials and Packing Materials 4,122,501 8,335,792

14.2 (ii) Work in Progress (Yarn) 923,548 2,852,835

14.3 (iii) Finished goods 10,531,879 1,879,417

14.4 (iv) Stock in trade (in respect of goods acquired for trading) 69,552 872,934

14.5 (v) Consumables & Stores 5,247,281 4,932,210

20,894,761 18,873,188

15. TRADE RECEIVABLES

Unsecured, considered good

15.1 Due over Six Months 23,309,403 24,914,195

15.2 Others 37,637,881 39,284,831

60,947,284 64,199,026

As at 31/03/2011

`̀̀̀̀

Note

No.As at 31/03/2012

`̀̀̀̀


37

Particulars

16. CASH AND CASH EQUIVALENTS

16.1 (i) Cash on hand 542,405 422,447

16.2 (ii) Balances with Local banks

- In Current Account ------ 311,828

- In Fixed Deposit 2,100,991 2,100,991

16.3 (iii) Bank Overdraft (Temporary Book Overdraft) (2,921,348) (5,047,116)

(277,952) (2,211,851)

17. SHORT-TERM LOAN AND ADVANCES

(Unsecured, Considered Goods)

17.1 Prepaid Expenses 171,593 399,054

17.2 Loans to employees 9,435 12,285

181,028 411,339

18. OTHER CURRENT ASSETS

18.1 Advance to Suppliers 3,865,050 3,074,072

18.2 Interest Accrued on Deposits 570,536 378,168

4,435,586 3,452,240

19. REVENUE FROM OPERATIONS

(a) Sale of products 211,254,304 183,859,278

(b) Other Operating revenues

(i) Sale of Scrap 1,058,790 800,948

(ii) Income from Jobwork Activity 4,608,455 1,938,241

(iii) Duty Drawback Received from Customs 266,062 -----

(iv) Freight recovered from Customers 197,780 -----

6,131,087 2,739,189

217,385,391 186,598,467

19.1 PARTICULARS OF SALE OF PRODUCTS

Name of Product

(i) Fabrics including Grey Fabrics 112,288,908 111,507,630

(ii) Fibres & Acrylic Waste (Traded Goods) 75,230,657 47,160,789

(iii) Polyster & Viscose (Traded Goods) ------- 25,190,859

(iv) Fancy Shirting (Traded Goods) 23,734,740 -----

211,254,304 183,859,278

As at 31/03/2011

`̀̀̀̀

Note

No.As at 31/03/2012

`̀̀̀̀



38


Particulars

20. OTHER INCOME

(a) Interest Income 313,400 219,964

(b) Net gain on foreign currency transactions & translations 363,105 -----

(c) Other non-operating income

(i) Balances Written Back 101,546 85,228

(ii) Profit on Sale of DGFT License 688,409 -----

(iii) Proceeds of Investments written off in earlier years 385,490 -----

(iv) Reversal of Excess Provision of Expenses 20,359 -----

(v) Commission ----- 600,000

(vi) Other Income 543 49,133

(d) Profit on Sale of Fixed Assets (Net) 207,913 -----

2,080,766 954,325

21. COST OF MATERIALS CONSUMED

Raw material consumed

Opening Stock 8,289,196 3,875,888

Add : Purchases during the year (Inc. Incidental Expenses) 88,767,068 100,375,102

Less : Closing Stock (4,076,228) (8,289,196)

92,980,036 95,961,793

Purchase of traded goods

Opening Stock 872,934 ------

Add : Purchases (including incidental expenses) 78,397,741 39,950,441

Less : Closing Stock (69,552) (872,934)

79,201,123 39,077,507

Purchase of Packaging Material

Opening Stock 46,596 79,809

Add : Purchases (including incidental expenses) 757,635 923,763

Less : Closing Stock (46,273) (46,596)

757,958 956,976

172,939,117 135,996,276

As at 31/03/2011

`̀̀̀̀

As at 31/03/2012

`̀̀̀̀

Note

No.


39


ParticularsAs at 31/03/2011

`̀̀̀̀

As at 31/03/2012

`̀̀̀̀

21.1 PARTICULARS OF MATERIAL CONSUMED

(Including Trading Stock)

(i) Yarn 87,487,418 92,574,904

(ii) Fibres & Acrylic Waste (Traded Goods) 55,701,382 22,599,935

(iii) Polyster & Viscose (Traded Goods) ----- 16,477,572

(iv) Fancy Shirting 23,499,742 -----

(v) Packaging Material 757,958 956,976

(vi) Others 5,492,618 3,386,890

172,939,117 135,996,277

22. CHANGES IN INVENTORIES OF FINISHED GOODS,

WORK-IN-PROGRESS AND STOCK-IN-TRADE

Decrease/(Increase) in stock

Opening stock - Work In Process 2,852,835 2,081,011

Closing stock - Work In Process (923,548) (2,852,835)

1,929,287 (771,824)

Opening stock - Finished Goods 1,879,417 3,403,982

Closing stock - Finished Goods (10,531,879) (1,879,417)

(8,652,462) 1,524,565

(6,723,175) 752,741

23. EMPLOYEE BENEFIT EXPENSE

(i) Salaries, Wages & Other Benefits 12,638,907 10,808,717

(ii) Contribution to provident and

other funds (Ref. Note No. 1.10) 242,140 375,896

(iii) Staff welfare expenses 290,575 294,263

13,171,622 11,478,876

24. FINANCE COSTS

Bank Charges 209,653 45,629

Loan Processing Charges ----- 110,850

Discounting Charges 133,681 -----

Interest expense 4,364,386 1,677,887

4,707,720 1,834,366

Note

No.


40


Particulars

25. OTHER EXPENSES

(a) Consumption of stores and

spare parts & other Consumables 3,122,066 5,580,413

(b) Power, Fuel and Water Charges 5,715,009 4,766,928

(c) Repairs

(i) Factory Building & Machinery 413,802 102,810

(ii) Computers 43,871 31,181

(iii) Others 204,752 299,234

662,425 433,225

(d) Insurance Premium 229,634 203,137

(e) Rates and taxes, excluding, taxes on income 59,672 383,864

(f) Auditors Remuneration

(i) Audit fees 150,000 130,000

(ii) Taxation matters 50,000 20,000

(iii) Income Tax matters 15,000 -----

(iv) Other Services ----- 38,000

(v) Service Tax 26,574 19,000

241,574 207,000

(g) Directors Remuneration 720,000 768,871

(h) Directors Sitting Fees 35,000 30,000

(i) Legal and Professional fees 1,385,793 1,409,544

(j) Postage, Telephone and Telegram 475,491 364,785

(k) Printing and Stationery 115,698 332,263

(l) Travelling and Conveyance 1,151,162 1,098,926

(m) Freight and forwarding charges 1,492,571 364,660

(n) Motor Car Expenses 396,205 581,692

(o) Annual Listing & Custodial Charges 60,835 588,256

(p) Unloading Expenses 641,352 106,308

(q) Delivery Charges 210,125 -----

(r) Selling & Distribution Expense 1,882,232 676,822

(s) License Charges 15,930 7,700

(t) Pollution Control Fees ----- 160,000

(u) Security Charges 308,943 337,074

(v) Miscellaneous expenses 419,754 656,132

(w) Prior Period Expense ----- 111,296

19,341,472 19,168,896

As at 31/03/2011

`̀̀̀̀

As at 31/03/2012

`̀̀̀̀

Note

No.


41


Particulars

26. CONTINGENT LIABILITY

The Company has mortgaged its immovable property

situated at its Solapur Plant to secure the due repayments

to Union Bank of India of all amounts advanced or various

facilities granted by the Bank to Lahoti Knitfab Limited

to the extent of Rs 36 cr. The Company has given this

Guarantee for entering into a marketing tie-up whereby

the company will get exclusive marketing rights for

sale of the product in India. ----- -----

27. CIF VALUE OF IMPORTS

Raw Materials

28. EARNINGS IN FOREIGN EXCHANGE

FOB Value of Exports 21,597,505 0

29. DETAILS OF CONSUMPTION

Particulars As at 31/03/2012 `̀̀̀̀ % As at 31/03/2011 `̀̀̀̀ %

Raw Materials

Indigenous 92,980,036 100.00 95,961,793 100.00

Imported ----- -----

Total 92,980,036 100.00 95,961,793 100.00

30. THE COMPANY HAS CLASSIFIED THE VARIOUS BENEFITS PROVIDED TO EMPLOYEES

AS UNDER

Charge to Profit & Loss Account based on contributions

Particulars

30.1 Gratuity (includes past liability of Rs.480,587 ) ----- -----

30.2 Contribution to:

Employees' Group Gratuity Scheme 14,865 170,626

Provident Fund 217,494 205,270

Employees' Leave Salary 241,074 2,055

473,433 377,951

As at 31/03/2011

`̀̀̀̀

As at 31/03/2012

`̀̀̀̀

Note

No.

31. EARNINGS PER SHARE

Profit for the year 4,130,185 6,332,469

Weighted Average No. of Shares 74,955,000 7,495,500

Earnings per Share (Basic and Diluted) 0.06 0.84

Face Value per Share 1 10

ParticularsAs at 31/03/2011

`̀̀̀̀

As at 31/03/2012

`̀̀̀̀

As at 31/03/2011

`̀̀̀̀

As at 31/03/2012

`̀̀̀̀


42

Note 32 : Disclosures under Accounting Standards (contd.)

Description of Relationship

Subsidiary

Chairman/Shareholder

Managing Director

Director

Director

Relatives of KMP

Relatives of KMP

Relatives of KMP

Company in which KMP /

Relatives of KMP can exercise significant influence

Company in which KMP /

Relatives of KMP can exercise significant influence

Names of the Related Parties

Force Protective Solution Pvt Ltd

Rajesh Somani

Anantvikram Somani

Atul B Rawal

R J Lade

Jyoti Somani

Rajesh Somani HUF

Annika Somani

Lahoti Terra Knitfab Ltd

Nal Properties Pvt Ltd

Note: Related parties have been identified by the Management.

Details of Related party transaction for the year 2011-2012, & Outstanding Balances as at 31/03/2012

PARTICULARS

Sale of Consumables(Lahoti Terra Knitfab Ltd.) ----- ----- ----- 9,956 9,956

Sale of fixed assets(Lahoti Terra Knitfab Ltd.) ----- ----- ----- 1,500,075 1,500,075

Finance (including loans and equitycontributions in cash or in kind)Force Protective Solutions Pvt. Ltd. ----- ----- 490,000 ----- 490,000

Remuneration to DirectorsAnantvikram Somani 720,000 ----- ----- ----- 720,000

Board Meeting FeesRajesh Somani 15,000 ----- ----- ----- 15,000

Director Sitting FeesAtul Raval 4,000 ----- ----- ----- 4,000R J Lade 16,000 ----- ----- ----- 16,000

Balances outstanding as at 31/03/2012Loans and advancesRajesh Somani 4,272,615 ----- ----- ----- 4,272,615Anantvikram Somani 1,389,325 ----- ----- ----- 1,389,325Jyoti Somani ----- 11,683,771 ----- ----- 11,683,771Rajesh Somani HUF ----- 110,796,149 ----- ----- 110,796,149Annika Somani ----- 200,000 ----- ----- 200,000Nal Properties Pvt Ltd 1,465,000 1,465,000

Total 6,416,940 122,679,920 490,000 2,975,031 132,561,892

KMPRelatives

of KMPSubsidaries

Entities in which KMP/Relatives of

KMP have significantinfluence

Total


43

NOTE NO (1). NOTES FROMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDEN31ST MARCH, 2012.

BACKGROUND & NATURE OF OPERATIONS:Volant Textile Mills Ltd ('The Company') is engaged in the business of Textiles. The principal activityof the company is manufacture of Gery Fabrics & Trading of Acrylic fibers & other textiles.

A) SIGFINICANT ACCOUNTING POLICIES.

a) ACCOUNTING CONVENTION

i. The Company follows the mercantile system of accounting, except in case of interest receivable,which will be accounted for on receipt basis and recognizes expenditure and income on anaccrual basis except those with significant uncertainties.

ii. The accounts are prepared on historical cost basis as going concern and are consistent withgenerally accepted accounting principles.

b) FIXED ASSETS

Fixed Assets are capitalised at cost of acquisition inclusive of inward freight, duties, taxes andincidental expenses related to acquisition.

c) DEPRECIATION

Depreciation on fixed Assets is provided on pro-rata basis on straight line method at the ratesand in the manner prescribed in Schedule XIV of the Companies Act, 1956.

d) INVENTORIES

The stock is physically verified by the management at the end of the year and is considered forvaluation purpose.

i. Stock of raw material is valued at cost on FIFO basis.

ii. Stock of Work-in-progress is valued at cost.

iii.Stock of finished goods is valued at lower of cost or net realisable value. Cost referred to in (ii)and (iii) is arrived at by the direct cost method, including appropriate share of variable cost.

iv. Stock of stores and spare parts is valued at cost.

e) REVENUE RECOGNITION

Revenue from the sale of goods is recognized when the titles to the goods and its significantrisks and rewards are passed to the customers.

f) DEFERRED TAX LIABILITY

Deferred tax asset is not recognised unless there are timing differences and reversal of whichwill result in sufficient income or there is virtual certainty that sufficient future taxable incomewill be available against which such deferred tax asset can be realised.

g) FOREIGN CURRENCY TRANSLATION

There are no outstanding Foreign exchange dues as on 31st March, 2012.


44

h) MISCELLNEOUS EXPENDITURE

Expenses incurred on designing, marketing of new product is amortized over a period of fiveyears. 1/5th of the expenses shall be written off every year from the year of first sale of newproduct.

B) ADDITIONAL DISCLOSURES TO FINANCIAL STATEMENTS

1) The accumulated losses of the Company exceed its net worth. However these accounts havebeen prepared on a going concern basis as the management believes that the company will beable to meet all its liabilities on the financial support from its Promoters/ Directors who haveagreed to provide all the necessary financial support time to time.

Accordingly these financial statements do not include any adjustments relating to therecoverability and classification of the carrying amount of Assets or the amount and classificationof Liabilities that might have to be done should the company be unable to continue as GoingConcern.

2) Contingent Liabilities not provided for:

i. Aggregate Central Excise duty of Rs 151.52 lacs and Rs 4.88 lacs demanded by the respectiveauthorities are disputed amounts and not acknowledged as debts. In the opinion of themanagement these demands are not payable, as the company has preferred an appeal againstthem. The same shall be charged to revenue in the year the demands are determined andpaid. The company has made a deposit of Rs. 15.00 lacs and Rs. 1.00 lac with the CentralExcise for pursuing the appeal.

ii. The Income Tax Department has approached the Appellate Tribunal against the order of CIT(A).The amount disputed is depreciation of Rs. 45.61 Lacs which was attributed to increase invalue of assets on account of foreign exchange fluctuation. The Appellate Tribunal has ruledin favour of the Company in the hearing held on 2nd August, 2012.

iii.The High Court has ruled in favour of the Company in the case against the Asst. PFCommissioner, and the case is dismissed. The Company has asked for refund of its depositamount and subsequently the PF Authorities are conducting an enquiry u/s 7A for assessmentduring the exemption period, after which the amount will be refunded to the Company.

iv. In respect of pending assessments with the Government bodies and authorities, amountspayable towards additional demands, interest and penalty, if any, shall be charged to revenueaccount in the year in which such demands materialize and is paid, the amount beingunascertainable.

v. The Company has an Export Obligation on duty free imports the details of which are asfollows:

a) Rs. 82,79,368/- equivalent to USD 1,73,028 to be completed by 13.10.2012.

b) Rs. 1,95,04,095/- equivalent to USD 4,81,582 to be completed by 02.06.2016.

c) Rs. 1,64,47,903/- equivalent to USD 3,80,739 to be completed by 04.09.2016.

The Company has already completed the required exports against the licences mentionedabove and are in the process of getting the licences closed. The Company has already receivedfrom DGFT the permission for closure of licence mentioned in point (a & c) and has applied tothe customs for release of the guaranty provided to them. Permission from DGFT is awaitedfor the licences mentioned in point (b).


45

5) The Company used to adjust the foreign currency exchange rate differences on amounts borrowedfor acquisition of fixed assets, to the carrying cost of fixed assets in compliance with RevisedSchedule VI to the Companies Act, 1956 as per legal advice, which was at variance to thetreatment prescribed as per Accounting Standard 11. During the Current year, the ForeignExchange rate difference has been taken in the Profit & Loss Account.

6) Segment information:

a) Primary Segment.

In accordance with Accounting Standard 17 "Segmental Reporting" issued by the Council ofthe Institute of Chartered Accountants of India, the Company has determined its businesssegment as manufacturing of grey fabrics. There are no other primary reportable segments.

b) Sales Revenue (By Geographical segment)

3) Assets aggregating to Rs.60.14 Lacs were acquired on lease for five years. The lease period hasexpired on 31.12.2002. Moreover, the company has to pay Rs.82.87 Lacs to the lessor as on31.3.2004. The lessor has also filed a case against the company for non-payment of lease rent intime. Any additional interest and/or penalty for delay in making lease rents shall be charged torevenue in the year of payment, the amount being unascertained, no provision for the same ismade. The company has not yet been able to settle with the lessor as part of the restructuringexercise.

4) The balances of secured and unsecured loans, sundry debtors, sundry creditors, current liabilities,loans, and advances are subject to confirmation and reconciliation. Adjustments, which mayarise on receipts of confirmation and completion of reconciliation, are not ascertainable at thisstage.

1. Payment to Auditors(Rs. in Lacs)

Previous yearCurrent year

i) Audit fees 1.50 1.30

ii) Income Tax matters 0.50 0.20

iii)Other services 0.15 0.38

iii) Service Tax 0.27 0.19

2.42 2.07

2. Director's remuneration

(Rs. in Lacs)


Managing Director's remuneration 7.20 7.69

Executive Director's Remuneration ------ ------

Sitting fees 0.35 0.30

7.55 7.99

(Rs. in Lacs)


Within India 1944.34 1537.82

Outside India 2318.76 328.16

2176.10 1865.98


46

7) The Company has accumulated losses which have exceeded the networth of the company. Thecompany has been declared sick by BIFR vide its letter dt. 1.3.2006 having case No. 322/02 ondirective of AAIFR. Bank of Baroda has been appointed as the Operating Agency, and they arepreparing and submitting a revised rehabilitation scheme and to the Hon'ble BIFR. The accountsare prepared on a going concern basis.

8) Taxation:

No provision of Income Tax has been made as the Company is registered with BIFR and is notrequired to pay MAT under Section 115-JB of the Income Tax Act as the said section is notapplicable to a Company registered with BIFR and having negative net worth on the openingday of the financial year. Moreover, the auditor has relied upon the opinion produced by theManagement of the Company, in the matter.

9) Employee Benefit:-

i. The liability for compensated absence carried forward on the balance sheet date is providedby the management. The Company has made a provision for leave pay to Rs. 2.41 lac (previousyear of Rs. 0.021 lacs).

ii. During the year company makes annual contribution to a Gratuity Fund administered andmanaged by the Life Insurance Corporation of India. The company accounts its liability forgratuity benefit based on valuation done by LIC as at balance sheet date. The company paidannual contribution to Gratuity fund of Rs. 0.15 lacs in current year (previous year gratuityprovided of Rs. 1.71 lacs).

10) Loans and Advances include Rs.41.83 lacs (previous year 29.05 lacs) recoverable from variousgovernment authorities towards refund of electricity duty, CST and VAT. The management ispursuing the matter and is hopeful of recovering the same

11) The accounts have not been authenticated by a whole-time company secretary as the Companydoes not presently have a whole-time company secretary as required by Section 383 A(1) of theAct.

12) The Company has incorporated a subsidiary company named M/s Force Protective Solutions Pvt.Ltd. during the year and hence disclosure in respect of Loans and Advances pursuant to Clause32 of the Listing Agreement is applicable to the Company.

13) The amount transferred to investor and education fund Rs. Nil (Previous year Rs. Nil).

14) The Company does not possess information as to which of its suppliers is Small Scale IndustrialUndertakings holding permanent registration certificate issued by the relevant authorities.Consequently, the liability, if any, of interest which would be payable on delayed paymentsunder Small Scale and Ancillary Industrial Undertakings Act, 1993, of India cannot be ascertained.However, the Company has not received any claim in respect of such interest. In view of theabove, outstanding dues to Small Scale Industrial Undertaking cannot be ascertained.

15) Figure for previous year have been regrouped/rearranged wherever necessary.


47

PARTICULARS AS AT AS AT

31.03.2012 31.03.2011

(In `)CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012

(A) Cash flows from operating activities

Profit before tax and prior period item 4,130,185 6,332,469

Adjustments for :

Depreciation and amortisation expenses 9,300,421 11,989,167Interest income (313,400) (219,964)Excess provision written back (20,359) -Profit on Sale of Fixed Assets (207,913) -Prior year Adjustments - 111,296Proceeds from Investment written off earlier (385,490) -Finance costs 2,989,347 1,437,686Sundry balances written off (101,546) (85,228)Operating profit before working capital changes 15,391,245 19,565,426

Add/(Less): Change in working capital:

(Decrease)/ increase in long term and short term liabilities and provisions 7,485,542 8,641,668Increase in trade payable and other current liabilities 1,368,731 19,434,044Increase in inventories (2,021,573) (2,481,040)Increase/(Decrease) in trade receivables 3,251,742 (31,545,699)(Decrease)/ Increase in short term and long term loans and advances (1,121,954) 3,555,578(Decrease)/ Increase in Miscellaneous Expenditure - (551,500)Cash generated from operating activities 24,353,734 16,618,478

Income taxes paid (114,567) (135,186)Cash generated from operating activities before extraordinary items 24,239,166 16,483,292

Extraordinary Item:Proceeds from Investment Written-off 385,490 -Prior year Adjustments - (111,296)

Net Cash generated from operating activities 24,624,656 16,371,996

(B) Cash flows from investing activities

Purchase of tangible assets (1,532,164) (247,499)Interest received 313,400 219,964Proceeds from sale of tangible assets 4,088,196 46,921Purchase of non-current investments (490,000) -Net cash used in investing activities 2,379,432 19,386

(C) Cash flows from financing activities

Repayment of short term borrowings (5,900,338) -Proceeds from Short term borrowings - 4,484,285Proceeds from Long term borrowings 12,502,934 -Repayment of Long term borrowings (30,809,207) (20,350,579)Finance costs (2,989,347) (1,437,686)Net cash used in investing activities (27,195,959) (17,303,980)

Net increase / (decrease) in cash and cash equivalents(A+B+C) (191,870) (912,598)Cash and cash equivalents as at the beginning of the period 734,275 1,646,873Cash and cash equivalents as at the end of the period 542,405 734,275

The notes referred to above form an integral part of the financial statementsThis is the cash flow statement referred to in our report of even date



DHARMEN B. SHAH, Partner

Member No. 036324 Firm No. 121252W






48

VOLANT TEXTILE MILLS LIMITEDRegd. Office: Shreeniwas House, Gr. Floor, 27, H. Somani Marg, Mumbai - 400 001.

ATTENDANCE SLIP

PLEASE COMPLETE THIS ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THEMEETING HALL. It helps us to make proper arrangements. Failure to bring this Attendance Slip willcreate unnecessary inconvenience to you. Joint Shareholders may obtain additional attendanceSlips

Full name of Shareholder Please write Reg. Folio Number

I hereby record my presence at the 17th ANNUAL GENERAL MEETING of the company to be held onSaturday, the 29th day of September, 2012 at 10.30 a.m. at the Registered Office of the Company.

Notes:

1)Member/Proxy holders are requested to bring the copies of the Annual Report with them at the Meeting.

2)Please carry with you this Attendance slip and hand over same, duly signed at the space provided, at the entrance of the meeting hall.

VOLANT TEXTILE MILLS LIMITEDRegd. Office: Shreeniwas House, Gr. Floor, 27, H. Somani Marg, Mumbai - 400 001.

PROXY FORM

I/We____________________________________________________ of _____________________ being a

member/members of the above mentioned Company, hereby appoint __________________________

________________________________________________________________________________________

____________________________________ of ______________________________________ or failing him

_____________________________________________________________________________________ of

________________________________________________________________________________________

my/our proxy to vote for me/us and on my/our behalf at the 17th ANNUAL GENERAL MEETING ofthe Company on Saturday the 29th day of September, 2012 at 10.30 a.m. and at any adjournmentthereof.

Signed this _______________ day of ________________ 2012.

Reference Folio:

No. of Shares:

Notes:

1) The Proxy need not be a member of the Company.

2) The Proxy From duly signed across Re. 1.00 Revenue Stamp Should reach the Company'sRegistered Office at least 48 hours before the time of meeting

Affix Re. 1RevenueStamp

Documents

VOLANT TEXTILE MILLS LIMITED - Bombay Stock Exchange · VOLANT TEXTILE MILLS LIMITED will be held at the company's Registered Office at Shreeniwas House, 2nd Floor, H. Somani Marg,