Bombay Dyeing and Manufacturing Company

The Directors hereby present their Report on the business and
 operations of the Company and the financial accounts for the year ended
 31st March, 2008.
 
 1.  FINANCIAL RESULTS:
 
                               For the year ended     For the Year ended
                                  31st March,2008        31st March,2007
                                 Rupees in Crores       Rupees in Crores
 
 GROSS TURNOVER AND OTHER INCOME          1013.95                536.15
 Profit before Gratuity provision, 
 Finance Costs, Depreciation and
 Voluntary
 Retirement Compensation                   120.42               707.53
 Contribution to Gratuity Fund               0.75                 6.15
 Finance Costs                              75.31                31.70
 Profit before Depreciation & Voluntary 
 Retirement Compensation                    44.36                69.72
 Depreciation                               35.42                17.45
 Voluntary Retirement Compensation W/O       1.39                11.85
 Capitalisation of Voluntary Retirement 
 Compensation W/O in Previous Year         (10.46)                  -
 PROFIT BEFORE TAX                          18.01                40.41
 Less: Tax (net)                             1.33                 4.43
 PROFIT AFTER TAX                           16.68               35.9.3
 Add: Balance in Profit and Loss 
 Account of Previous Year                  194.40               187.15
 Debenture Redemption Reserve                2.50                   -
 SURPLUS AVAILABLE FOR APPROPRIATIONS      213.58               223.03
 
 Appropriations to:
 Proposed Dividend
 Final Dividend                             13.52               19.31
 Corporate Dividend Tax                      2.30                3.23
 Debenture Redemption Reserve                7.50                2.50
 General Reserve                             1.67                3.59
 Balance carried to Balance Sheet          188.59              194.40
 
 2.  COMPANY RESULTS AND DIVIDEND:
 
 The Companys turnover has gone up from Rs.536 crores to Rs. 1014
 crores during the current year. The turnover of the Textile Division
 has shown a marginal decline. The PSF Division, which commercially
 commissioned the plant on October 1, 2007 has recorded a turnover of
 Rs.411.32 crores during the six months period up to March 31, 2008. The
 revenue from the Real Estate Division has grown from Rs.124 crores last
 year to Rs.240 crores in the current year.
 
 The financial performance of the two manufacturing divisions of the
 Company has been severely impacted by fierce price competition and an
 appreciating Rupee in the case of Textile business and high raw
 material prices and over-supply situation in the PSF business. This is
 reflected in Profit before Tax declining from Rs.40 crores to Rs.18
 crores during the current year. While all efforts are being made to
 improve the margin in both the businesses, the impact is expected to be
 gradual, given the ground realities. The Real Estate Division will also
 require substantial infusion of funds, as construction activity picks
 up pace.
 
 Your directors recommended a dividend of Rs. 3.50 per share of Rs. 10
 each for the year ended 31st March, 2008, to be paid if declared by the
 members at the ensuing Annual General Meeting.
 
 3.  TEXTILE DIVISION
 
 Overall sales turnover declined by 4.48% to Rs. 363 crores as against
 Rs.380 crores in the preceding year. However, sales of Rs.16 crores
 booked to capital account during trial runs at the Ranjangaon plant,
 and considering this there has been a marginal decline in the turnover.
 The financial performance of the Division has, however, been adversely
 affected with the year under review being major restructuring phase
 involving establishment of the new plant at Ranjangaon, relocation of
 part facilities from Worli and development of dedicated vendors for
 outsourcing of yarns, grey fabrics and job weaving.
 
 Loss of production during the transition period and stabilization of
 processing plant at Ranjangaon coupled with unfavourable exchange rate
 and fierce price competition led to a steep fall in exports from Rs.
 152 crores in the previous year to Rs 100 crores in the year under
 review. Domestic sales, however, maintained an upward trend recording a
 12% increase with the sales through the Retail Distribution System
 (RDS) achieving a healthy growth of 24%.
 
 Bombay Dyeing has won Lycra Images Fashion Award as the Most Admired
 Brand in the Home Fashion Category, for the third year in succession.
 
 Partial commercial production of new state-of-the-art processing and
 sewing facilities has already commenced at Ranjangaon.  Remaining
 balancing machines including coal-fired boilers and thermopacks are
 expected to be operational in the second quarter of 2008-09 followed by
 augmentation of wide-width printing capacity towards the last quarter.
 
 As planned 14 new Company showrooms including the Concept Store at
 Worli were opened during the year under review in addition to
 upgradation and renovation of 12 franchise stores.  The Division
 continues to upgrade and widen its bed-n-bath category by continually
 introducing new products straddling a wide price band.
 
 The above initiatives in the manufacturing and marketing areas
 supported by strong supply chain will help the Division in re-
 capturing some of the export business lost during transition period as
 also achieving quantum growth in the domestic business in the years to
 come.
 
 4.  POLYESTER DIVISION
 
 During the first half of the year, the balance facilities for use of
 PTA were erected even while the PSF Plant was being tested using DMT as
 feedstock. Following this, the Plant was shut down for tie-in of the
 PTA facilities. In September the Plant was re- started with PTA as
 feedstock.
 
 The Plant went into commercial production from 1st October, 2007 after
 achievement of performance parameters in the PTA route.  Since then the
 Plant capacity has been raised to over 80% of its rated capacity and
 various grades of PSF and Chips have been sold to the customers in
 India and abroad. The Plant performance and product acceptance in the
 market have been good.
 
 The turnover of the Division for the 6-month period from October, 2007
 was Rs.411 crores. The financial performance of the Division has,
 however, suffered owing to high prices of raw materials and fuels as
 also due to over-supply position particularly in the domestic market.
 
 While options to enhance the value of the business in terms of better
 margins are being pursued vigorously, the improvement is expected to be
 only gradual at least for some time.
 
 Since DMT has ceased to be a marketable product, DMT Plant has been
 disposed of on as is where is basis. Some of the facilities of the
 DMT Plant such as Substation, Effluent Treatment and such other
 utilities and offsites are, however, being retained to service the PSF
 Plant.
 
 5.  REAL ESTATE DIVISION
 
 The construction of the Residential Tower at Spring Mills is 40%
 complete, and more than 80% of the apartments have been sold.  Demand
 continues to be positive in a market that has slowed down during the
 course of the year. Construction work at Dadar and Worli is
 progressing, with emphasis on completion of the first two commercial
 and IT/ITES buildings in the year 2009-10.
 
 Phase 1 of the development has been expanded to include larger
 commercial office and IT/ITES space at both the Dadar and Worli
 locations.
 
 Inflationary impact on cement and steel prices, along with shortage of
 construction workers continues to be a problem for the Real
 Estate Industry. Larsen & Tubro, who have the overall responsibility
 for construction will focus on attempts at increasing the construction
 speed in line with the regulatory permissions from time to time.
 
 6.  TAXATION
 
 The Income Tax Appellate Tribunal has passed an order for the
 assessment year 1989-90 and based on this the department has raised a
 demand of Rs.1.76 crores. The Company is contesting the demand in
 appeal before the High Court, Mumbai, and expects to succeed.
 Consequently no further provision in the books of accounts is
 considered necessary. However, the disputed demand has been disclosed
 as a contingent liability.
 
 7.  FIXED DEPOSITS
 
 The Company had suspended acceptance of fresh deposits and renewal of
 existing deposits from 1st March, 1999. There are no outstanding
 deposits remaining unpaid as on 31st March, 2008.
 
 8.  PREFERENTIAL ISSUE OF WARRANTS
 
 During the year under review the Company has issued on a preferential
 basis to a company in the Promoter Group 19,30,000 warrants in
 accordance with the Guidelines for Preferential Issues contained in
 Chapter XIII of the Securities and Exchange Board of India (Disclosure
 and Investor Protection) Guidelines, 2000 (the SEBI Guidelines), with
 an option to apply for and be allotted an equivalent number of fully
 paid up equity shares of the Company. This option is exercisable any
 time within 18 months from the date of issue of the warrants. The issue
 price was determined at Rs. 616 per share in accordance with the
 pricing formula prescribed under the SEBI Guidelines. The issue was
 approved by the shareholders through postal ballot in accordance with
 Section 81(1 A) of the Companies Act, 1956 (the Act) read with
 Section 192A of the Act and the Rules made thereunder
 
 9.  CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 Information pursuant to Section 217(1)(e) of the Companies Act, 1956
 read with the Companies (Disclosure of Particulars in the Report of
 Board of Directors) Rules, 1988 is given in Annexure A to this
 Report.
 
 10.  EMPLOYEE STOCK OPTION SCHEME
 
 No stock options were granted under the Companys Employee Stock Option
 Scheme (ESOS) during the year under review.  However, requisite
 disclosure in respect of the ESOS covering the options granted in the
 earlier years in terms of guideline 12 of the Securities and Exchange
 Board of India (Employee Stock Option Scheme and Employee Share
 Purchase Scheme) Guidelines 1999, has been provided in Annexure B to
 this Report.
 
 The Share Capital of the Company has gone up marginally by Rs. 18,700
 as at 31st March, 2008 and further by Rs. 15,800 as on the date of this
 Report consequent upon allotment of (i) 1,210 equity shares following
 the exercise of stock options granted under the ESOS and (ii) based on
 the orders lifting the attachment on the corresponding tainted shares
 passed by the Special Court constituted under the Special Court (Trial
 of offences relating to transactions in Securities) Act, 1992, 660
 equity shares during the year under review and subsequently 1,580
 equity shares on exercise of the rights attached to first and second
 detachable warrants forming part of the Rights Issue made in 1993 but
 kept in abeyance pursuant to Section 206A of the Companies Act, 1956.
 
 11.  PERSONNEL
 
 Employees of the Textile Division were paid Bonus as per the provisions
 of the Bonus Act. An additional 4.17% ex-gratia payment was made to
 maintain harmonious industrial relations.
 
 Ex-gratia payment to the employees of the PSF plant, covered by the
 Payment of Bonus Act, was made as a gesture of goodwill and for
 maintaining cordial industrial relations.
 
 12.  INSURANCE
 
 All the properties including buildings, plant and machinery and stocks
 have been adequately insured.
 
 13.  DIRECTORS
 
 The employment of Mr. M. K. Singh has been terminated and accordingly
 Mr. Singh will cease to be a Director of the Company with effect from
 7th July, 2008.
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Companys Articles of Association Mr. A. K. Hirjee, Mr.  R. N. Tata and
 Mr. S. S. Kelkar retire by rotation and are eligible for
 re-appointment.
 
 14.  DIRECTORS RESPONSIBILITY STATEMENT:
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956 (hereinafter
 referred to as the Act), your Directors, based on the representations
 from the Operating Management, confirm that:
 
 (i) in the preparation of the Annual Accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departure;
 
 (ii) they have, in selection of the accounting policies consulted the
 statutory auditors and applied them consistently and made judgements
 and estimates that are reasonable and prudent so as to give a true and
 fair view of the state of affairs of the Company at the end of the
 financial year and of the profit of the Company for that period;
 
 (iii) they have taken proper and sufficient care, to the best of their
 knowledge and ability, for the maintenance of adequate accounting
 records in accordance with the provisions of the Act for safeguarding
 the assets of the Company and for preventing and detecting fraud and
 other irregularities;
 
 (iv) they have prepared the Annual Accounts on a going concern basis.
 
 15.  CORPORATE GOVERNANCE
 
 Pursuant to Clause 49 of the Listing Agreement a separate report on
 Corporate Governance and a certificate from the Auditors of the Company
 regarding compliance of the conditions of Corporate Governance are
 annexed to the Directors Report.
 
 16.  PARTICULARS OF EMPLOYEES
 
 Information in accordance with sub-section (2A) of Section 217 of the
 Companies Act, 1956 read with the Companies (Particulars of Employees)
 Rules, 1975, and forming part of the Directors Report for the year
 ended 31st March, 2008 has been provided in Annexure C to this Report.
 
 17.  AUDITORS
 
 Messrs A. F. Ferguson & Co., Chartered Accountants, who are the
 Statutory Auditors of the Company, hold office, in accordance with the
 provisions of the Companies Act, 1956 (the Act), upto the conclusion of
 the forthcoming Annual General Meeting. They have communicated that
 [for the reasons indicated in the notice convening the Annual General
 Meeting (AGM)] they are not seeking re-appointment at the ensuing AGM.
 The Company has received a special notice from a Member of the Company
 in terms of the provisions of the Act, signifying the intention to
 propose the appointment of Messrs Kalyaniwalla & Mistry, Chartered
 Accountants, as the Statutory Auditors of the Company from the
 conclusion of the ensuing AGM until the conclusion of the next AGM.
 Messrs Kalyaniwalla & Mistry have also expressed their willingness to
 act as Auditors of the Company, if appointed, and have confirmed their
 eligibility. Members are requested to appoint Messrs Kalyaniwalla &
 Mistry as Auditors at remuneration to be fixed by the Board of
 Directors.
 
                                 On behalf of the Board of Directors
 
                                                     NUSLI N.WADIA
                                                        CHAIRMAN 
 Mumbai, 30th June, 2008
 
 Registered office
 Neville House, 
 J. N. Heredia Marg, 
 Ballard Estate, 
 Mumbai 400 001