Banswara Syntex

The Directors are pleased to present the 32nd Annual Report covering
 the operating and financial performance of Banswara Syntex Limited for
 the year ended 31st March, 2008.
 
 FINANCIAL REVIEW
 
                                                      Rs. in Lacs
 
                                           This year     Previous Year
 
                                            2007-08            2006-07
 
 Gross Income                               45,154             41,343
 
 Net Income                                 43,810             39,395
 
 Profit before depreciation & tax            2,747              3,904
 
 Less: Depreciation                          2,180              1,626
 
 Profit before tax                             567              2,278
 Tax on Income                                 125                -
 
 (a) Fringe Benefit Tax                         29                 23
 
 (b) Current Tax                                65                646
 
 (c)  Deferred Tax                              96                115
 
                                               190
 Less : MAT Credit Entitlement                  65
 
 Profit after Tax                              442              1,494
 
 Balance Brought Forward                       505                509
 
 Profit available for appropriation            948              2,003
 Appropriations:
 
 Proposed Dividend                             162                255
 
 Tax on Dividend                                28                 43
 
 Transfer to General Reserve                   150              1,200
 
 Balance Carried to Balance Sheet              608                505
 
 Earning per share (Rs.) :   Basic            3.34              12.02
 
 Diluted                                      3.34              11.39
 
 OPERATIONS
 
 Your Companys performance in production and sales has improved during
 the Financial Year 2007-08. The production of yarn increased to 216 lac
 kgs. up by 6% and production of garments went up by 30%, as compared to
 the production of the previous year. Your company has curtailed the
 production of low-priced 100% polyester fabric and has pushed up the
 production of value added fabrics. As a resuit, gross income of the
 Company (net of inter division transfers.) at Rs.45,154 lacs recorded
 an increase of 9.22% over the previous year.
 
 During the year, the Rupee appreciated against US Dollar was by more
 than 10%; this coupled with increase in raw material and fuel/coal
 prices, resulted in the profit before depreciation and tax declining to
 Rs.2,747 lacs for the year 2007-08 as against Rs.3,904 lacs in 2006-07.
 The profit after tax for the year 2007-08 has been Rs.442 lacs as
 compared to Rs. 1494 lacs in the preceding year.The Company paid Rs.29
 lacs as fringe benefit tax and Rs.65 lacs as Income Tax during the year
 besides providing of Rs.96 lacs as deferred tax liability.
 
 EXPORTS
 
 Your Companys performance on the export front has improved, during the
 year 2007-08; it achieved export turnover of Rs.24,479 lacs as against
 Rs.22,442 lacs during 2006-07 an increase of over 9%. This is after
 taking into account the impact of appreciation of Rupee against USD
 during the year. The fabric export increased by 21% and garment export
 by 11% while maintaining the quantum of yarn exports.
 
 During the year 2007-08, Turkey the major importer of the companys
 yarn has initiated Anti Dumping Investigation for imports of yarn of
 man-made staple fibre into Turkey from India. The Company has
 submitted its response to the Anti Dumping authorities of Turkey.
 
 The Companys Joint Venture with Carreman, France, has given it an
 access to the Worlds most prestigious and quality conscious customers
 for its fabrics and garments. As a result, export of value added fabric
 is increasing.
 
 Your Company has further attracted new customers of international
 repute during the year. The marketing and fabric design & development
 teams participated in national and international trade fairs to get the
 latest market trends and better understanding of the customers
 requirements.  The Company is also making sincere efforts to penetrate
 new international markets.
 
 DIVIDEND
 
 Your Directors are pleased to recommend 12% dividend (previous year 20%
 ) on the equity shares of the Company.  The dividend, if approved by
 the shareholders, will absorb Rs.162.17 lacs, (previous year Rs.255
 lacs) besides Rs.27.56 lacs payable to the Government by way of tax on
 dividend (previous year Rs.43 lacs). This includes the dividend of Rs.
 519 lacs payable on preferential shares, besides Rs.0.88 lacs tax
 thereon.
 
 INCREASE IN SHARE CAPITAL
 
 During the year the company converted 375000 preferential warrants into
 an equal number of equity shares at a premium of Rs.65.83 per share and
 issued 187500 bonus shares on these 375000 shares. Consequently the
 equity paid-up share capital of the Company stands increased from
 Rs.1251.50 lacs as on 31st March, 2007 to Rs.1308.14 lacs as on 31st
 March, 2008.
 
 EXPANSION, DIVERSIFICATION AND MODERNISATION
 
 During the year under review the Company invested Rs. 10,411 lacs in
 fixed assets including capital work-in- progress at Rs.3516 lacs as on
 31.03.2008.
 
 During 2007-08, the Company added 16440 new Ring Spindles and 17 Air
 Jet Tsudakuma Looms besides installation of 10 Picanol Looms in
 Carreman Fabrics India Ltd. The Company has also added 8160 Spindles
 for production of all wool/ polywool yarn which are expected to be
 commissioned starting commercial production from June, 2008. As the
 competition for the cotton yarn business intensified during the year,
 your Company converted 12096 spindles for cotton yarn spinning to
 blended yarn production.
 
 The Company has started a brand new fabric textile laboratory of
 international standards. The Company has applied for ISO 17025
 accreditation of NADL certification besides additions of few more
 machines for production of better quality fabric.
 
 Your directors are also pleased to inform that the Company has
 installed 10 Jacquard Looms for production of Upholstery Fabric and a
 new plant for readymade garments at SEZ, Surat. Uptill now the Company
 had garment production capacity only for Trousers; it has, now added
 one line for production of Jackets also. The upholstery and Surat
 division shall start production shortly.
 
 The term loan requirements for these expansion, diversification and
 modernization projescts is being met through term loans under TUF
 Scheme.
 
 JOINT VENTURE
 
 The JV Company, Carreman Fabrics India Ltd., has a weaving plant. Your
 Company owns 50% stake in its equity capital.  This company has earned
 net profit of Rs.7.10 lacs, in its first year full operations.(2007-08)
 It is producing fabric for the Company on job work basis. Your Company
 is also providing power for production of own fabric in JV company.
 
 POWER PLANT
 
 The Company has put-up a coal based Thermal Power Plant of 15/18 MW
 capacity. It started generation of power from September, 2007. It is
 meeting more than 90% of the power requirement, the balance requirement
 being met through Government supply. The Company has been allotted
 quota for the procurement of coal from Indian coal mines and is
 expected to get coal supply therefrom July, 2008. The generation of
 power with coal from Indian coal mines will further reduce the power
 cost. The furnace oil based power plants and connected load with AVNL
 Ltd. are stand-by resources.
 
 FINANCE
 
 During the year, The Company availed term loans aggregating Rs.9015.22
 lacs, from Banks and Financial Institutions, under TUF Scheme to fund
 various expansion, diversification and modernization programmes. The
 Companys Bankers/ Financial Institutions have continued to provide
 need-based funds to meet the long term and short-term requirements of
 the Company from time to time.
 
 CONTRIBUTION TO EXCHEQUER
 
 Your Company has, during the year, contributed Rs.1742 lacs to the
 Government Exchequer by way of Excise Duty, Service Tax, Value Added
 Tax (VAT), Income Tax, Dividend Tax, TC Cess and other levies.
 
 SUBSIDIARY COMPANY
 
 The Company has no subsidiary as on 31st March 2008.  However, it has
 50% interest in Carreman Fabrics India Ltd, a Joint Venture Company
 between Banswara Syntex Ltd. and Carreman, France.
 
 Q3RFORATE GOVERNANCE/MANAGEMENT DISCUSSION AND ANALYSIS REPORT
 
 As per Clause 49 of the Listing Agreement with the Stock Exchanges,
 Corporate Governance and Management Discussion and Analysis Report are
 annexed and marked Annexure-I, which forms part of this report.
 
 FIXED DEPOSITS
 
 The Company has not issued any advertisement inviting fixed deposits
 from the public. However, it continues to accept deposit from public.
 As on 31st March, 2008, your Company had such deposits aggregating
 Rs.634.78 lacs. Deposits which matured during the year were either
 renewed or repaid. All the interest and principal dues are being paid
 regularly. The Company has duly complied with the provisions of the
 Companies (Acceptance of Deposits) Rules, 1975.
 
 MANAGEMENT
 
 The tenure of Shri R. L. Toshniwal as Chairman & Managing Director is
 expiring on 31st July, 2009 and that of Shri Rakesh Mehra, Whole-time
 Director, on 30th September, 2008. Based on the recommendation of the
 Remuneration Committee, the Board has decided to re-appoint Shri R.L.
 Toshniwal as Chairman & Managing Director for a further period of 3
 years and Shri Rakesh Mehra as Whole time Director for a further period
 of 5 years, subject to approval of the shareholders in the Annual
 General Meeting.
 
 DIRECTORS
 
 In accordance with the Articles of Association of the Company, Shri
 Vijay Mehta, Shri P. Kumar and Shri D. P. Garg, Directors, are retiring
 by rotation and, being eligible, offer themselves for re-appointment.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 As required under Section 217(2AA) of the Companies Act, 1956, with
 respect to Directors Responsibility Statement, it is hereby confirmed
 that:
 
 I.  In the preparation of the annual accounts for the year ended March
 31, 2008, the applicable Accounting Standards have been followed.
 
 II.  The Directors have selected such Accounting Policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company as on 31st March, 2008 and of the profit of the Company
 for the year ended on that date.
 
 III.  The Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting frauds and other
 irregularities.
 
 IV The Directors have prepared the annual accounts of the Company for
 the year ended March 31, 2008 on a going concern basis.
 
 AUDIT COMMITTEE
 
 As per the requirement of Clause 49 of the Listing Agreements with
 Stock Exchanges and also the provisions of the Companies Act, 1956, the
 Company has reconstituted the Audit Committee which now comprises of
 four Independent Directors, viz. Shri D.S. Alva, Chairman, Shri P.
 Kumar, Shri Kamal Kishore Kacholia and Shri PA Makwana.
 
 The composition, role, functions and powers of the Audit Committee are
 in accordance with the applicable laws and Listing Agreements of the
 Company with Stock Exchanges.
 
 AUDITORS
 
 M/s. Kalani & Company, Chartered Accountants, Jaipur, hold office as
 the Auditors of the Company until the conclusion of the ensuing Annual
 General Meeting and are eligible for re-appointment. They have also
 furnished a Certificate to the effect that the re-appointment, if made,
 would be within the prescribed limits under Section 224(1-B) of the
 Companies Act, 1956.
 
 AUDITORS REPORT
 
 As regards Auditors observations, the relevant notes on account are
 self-explanatory and, therefore, do not call for any further comments,
 except in the matter of non payment of Service Tax and Cess thereon of
 Rs.5.58 Lacs and disputed liabilities of Rs. 11.75 Lacs towards the
 excise duty and Rs.  227.71 Lacs towards entry tax.
 
 The service tax has not been paid in view of the representations made
 by various Industry Associations to the Government of India with regard
 to the applicability of the service tax on such services provided
 outside India. As the Government has decided to give the refund of such
 taxes, the Board of Directors has decided to pay the same.
 
 As regards the payment of disputed liabilities.regarding excise duty
 the matter is under consideration of Government of India while the
 entry tax case is under appeal with the Honble High Court, Rajasthan.
 These liabilities would be met immediately if required and to the
 extent directed by the competent authorities.
 
 ENERGYCONSERVATTON, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS
 AND OUTGO
 
 A statement giving details of conservation of energy, technology
 absorption, foreign exchange earnings and outgo, in accordance with the
 Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988 is annexed and marked Annexure II, which forms
 part of this report.
 
 DEMATERIALISATION OF SHARES
 
 In pursuance of SEBI / Stock Exchange directions, your
 
 Company offered demat option to its esteemed shareholders so as to
 enable them to trade the shares in the demat form.
 
 In response, 95.22% shares have been converted into demat form up to
 31st March, 2008 The stock code number in NSDL and CDSL for equity
 shares of the Company is ISIN - INE 629 D01012.
 
 PARTICULARS OF EMPLOYEES
 
 During the year under report, the relation between the
 
 Companys management and its staff/workers remained cordial. The
 Directors place on record their deep appreciation for the devoted
 services of the workers, staff and the executives.
 
 As required by the provision of Section 217 (2A) of the Companies Act,
 1956, read with the Companys (Particulars of Employees) Rules, 1975,
 as amended, the particulars of employees of the company who were in
 receipt of remuneration of Rs.2,00,000/- per month or more are annexed
 and marked Annexure III, which forms part of this report.
 
 ACKNOWLEDGEMENT
 
 Your Directors wish to place on record their grateful appreciation for
 the assistance and co-operation received from the Financial
 Institutions, Banks, various Central & State Government Departments,
 Customers and Suppliers during the year under review. The Directors
 express their profound thanks to the shareholders for their continued
 support and goodwill and look forward to the future with confidence.
 
 
                                   For and on behalf of the Board
 
 Place : Mumbai                    R.L.TOSHNIWAL
 Dated : 29th May, 2008            Chairman  & Managing Director