Directors Report Dear Shareholders,
 
 The Directors hereby present the 22nd Annual Report along with the
 Audited Statement of the Company for the year ended 31st March 2011.
 
 Overview
 
 The global recovery is gaining strength, but unemployment remains high
 in advanced economies and new macro-economic risks are building in
 emerging market economies. Financial conditions continue to improve,
 although they remain unusually fragile. In many emerging economies,
 demand is robust and overheating is a growing policy concern.
 
 India has never faced as worst situation as the western economies have
 faced. It was just an experience of slower export, bad liquidity
 condition which hampered the developing economy to keep on the
 spectacular growth.
 
 The Indian economy witnessed a robust growth rate of 8.6% in 2010-11.
 
 Exports grew by 37.5% (fastest growth since independence) and totaled
 US 6 bn. Imports also showed an increase of 21.2% and totaled US $
 350 bn. Strong export growth performance in the second half of the
 financial year has helped bring the trade deficit down to more
 manageable levels.
 
 In 2010-11, India'' trade deficit was of the order of US $ 104 bn.
 Commerce and Trade Ministry is now confident that the export target of
 US $ 450 bn. by 2013-14 will be met.
 
 Further, textile and leather exports would be at advantage of the shift
 in Chinese policy towards boosting domestic consumption.
 
 In China''s Twelfth plan, exports do not hold the same place. Besides,
 the Chinese will be vacating spectrum like textiles and leather. This
 provides a bigger opportunity for India. Indian products would be more
 competitive as wage increase in China, as a result of its departure
 from its three-decade-old policy of export oriented growth.  Under its
 new plan, China is aiming for 13% annual growth in wages in its bid to
 boost domestic consumption. It has also signaled its intention to put
 more emphasis on high-end capital intensive exports.
 
 But concerns remain on increase in cotton prices and inflation trends.
 Further, the movement of Indian Government on lifting curbs on cotton
 yarn exports has added to the worries of Indian Textile industry.
 
 Also, there is quite an amount of fluctuation expected in Indian
 Currency against the US Dollar. The rupee which started the financial
 year at an average of Rs.44.44 touched a high of Rs.46.76 during July
 2010 and ended the financial year at an average of Rs.44.91.
 
 The future of the garment industry in India does not look bleak; on the
 contrary it is quite promising. At present, India is being considered
 as the next pioneer country in the ready made garments export business.
 
 Business Restructuring
 
 The Company was operating with two divisions - Exports and Domestic.
 Exports Division was further sub-divided into Tops and Bottoms Division
 and the Domestic Division was operating under the brand name, Indian
 Terrain. The Domestic Division and Bottoms Division cater to different
 markets / products. The company sensing the need to manage them as
 independent entities for enhancement of their capabilities and to have
 greater focus on their operations, decided to hive-off the divisions.
 Further, the hive-off would provide greater flexibility to the
 entities, to meet the needs for carrying out its operations. The
 hived-off divisions will realize true values when separated and also
 will maximize their returns and efficiency.
 
 This scheme would facilitate the entities involved, to explore new
 avenues and would enhance the future growth prospects for the people
 and organizations connected with them. The restructuring activities
 under the scheme would unlock shareholders value and create long term
 value for all the stakeholders. Also, it would enable easy entrant of
 Strategic / Financial Investor into the Companies.
 
 The Company accordingly filed a scheme of arrangement with the Hon''ble
 High Court of Madras for the demerger of Indian Terrain Division into
 Indian Terrain Fashions Limited (ITFL) and transfer of Bottoms Division
 on a going concern basis to Celebrity Clothing Limited (CCL), a 100%
 subsidiary, through slump sale.
 
 Further, the Company also envisaged write off the accumulated losses
 against the existing reserves. The Scheme of Arrangement is under
 Section 391 to 394 read with Section 78 and Section 100 to 103 of the
 Companies Act. The Appointed date was on 1st April 2010.
 
 The Honorable High Court of Madras, vide its order dated 16th August
 2010 sanctioned the Scheme of Arrangement except to the extent of
 transfer of Bottoms Division into Celebrity Clothing Limited through
 slump sale. The Order became effective 3rd September 2010.
 
 As per the Scheme, two shares of Indian Terrain Fashions Limited would
 be issued to shareholders of Company as on the record dated of 27th
 October 2010 for every seven shares held in the Company.
 
 Accordingly, the assets and liabilities pertaining to the domestic
 division as on 1st April 2010 was transferred to Indian Terrain
 Fashions Limited and the excess of assets over liabilities relating to
 the Domestic Division has been adjusted against the existing reserves
 as per the provisions of the Scheme of Arrangement.  Further the
 investment in Indian Terrain Fashions Limited existing prior to the
 date of demerger was cancelled and taken to Capital Reserve as per the
 provisions of the Scheme.
 
 However the Company did not envisage transfer of Bottoms division to
 Celebrity Clothing Limited. One of the main objects to transfer was to
 facilitate easy entry of Strategic / Financial Investor. The same did
 not materialize and in the absence of the same having two different
 entities would only result in additional costs and administrative
 inconvenience.
 
 Hence the Board of Directors of the Companies decided to withdraw the
 proposal of transfer of Bottoms Division and retained the same with the
 Company. The Honorable High Court of Madras, on submission of requisite
 affidavits by the Companies and pursuant to Clause 25 of the Scheme of
 Arrangement approved the modification to the Scheme of Arrangement.
 
 Further, the Company has written off a portion of the Accumulated
 losses as on 31st March 2010 against the securities premium account and
 other reserves to the extent available as per the provisions of the
 Scheme.
 
 The Company, in the Scheme, also proposed to fair value its immovable
 properties on 1st April 2010 and record the premiums under revaluation
 reserve. Though the Honorable High Court of Madras has sanctioned the
 fair valuation, the Company did not pursue the same.
 
 The Company''s net worth was fully eroded as on 31st March
 
 2010 under the provision of Sick Industrial Companies Act (SICA).
 Accordingly the Company filed a reference with the Board for Industrial
 and Financial Reconstruction (BIFR) under Section 15(1) of SICA. The
 reference was taken into consideration by BIFR and upon submissions
 made and material on record, BIFR has declared the Company as a Sick
 Industrial Company under section 3(1 )(o) of SICA vide its order dated
 19th April 2011. BIFR has given directions to the lenders and to the
 Company to submit a Rehabilitation Scheme as per Section 18 of SICA.
 
 As at the year end, the accumulated losses of the Company have resulted
 in erosion of net worth of the Company.
 
 The Accounts of the Company have been prepared on the basis of ''going
 concern concept'' despite negative net worth as on 31st March 2011 in
 view of the various strategic initiatives that the Company is exploring
 and also considering the proposed Rehabilitation Scheme to be submitted
 to BIFR. The Management is confident of being able to continue and
 operate the business and bring positive results in future.
 
 Financial Highlights - Rs. In Crs
 
                                             FY 2010-11       FY 2009-10
 
 Income From operations                          188.69           294.09
 
 Gross Profit / (Loss) before 
 interest and depreciation                         3.54             8.37
 
 Interest                                         14.29            18.98
 
 Profit / (Loss) before depreciation and tax      10.75           (10.6l>
 
 Depreciation                                      8.76             9.94
 
 Profit / (Loss) before Extra-Ordinary Income    <19.51>          (20.56)
 
 Extra-Ordinary Income                              -               8.33
 
 Profit/(Loss) before tax                        <19.51>          (12.23)
 
 Provision for Taxation                             -                -
 
 Profit/(Loss) after tax                         <19.51>          (12.23)
 
 Balance brought forward from previous year     (134.63)         (122.40)
 
 Less: Accumulated losses written off 
 pursuant to Scheme of Arrangement               102.39              -
 
 Balance carried to Balance Sheet                <51.75)         (134.63)
 
 
 Consequent to the demerger of the Domestic Division of the Company, the
 financial statements of the Company for the year ending 31st March 2011
 does not include the operations of the Domestic Division business and
 is therefore not strictly comparable with the figures of the previous
 year ended 31st March 2010.
 
 Operational Highlights
 
 The Company has recorded total revenues of Rs.189 crs with EBITDA at
 Rs.3.54 crs.
 
 During the year under review the Company has taken certain bold
 initiatives by dropping some of the low margin customers. The first
 half of the year witnessed unutilized capacities on account of the
 same.
 
 The Company from the second half of the financial year has started
 focusing on markets beyond US, mainly Europe which yielded significant
 margin improvements. Also, the Company dedicated a portion of its
 capacities to Domestic Business (on Job work Basis) which though does
 not add much to the Top line of the Business still yield good margins.
 
 A complete rejig was made to the Business as a whole and the Company
 has now built a platform with a much experimented business mix and
 improved production efficiencies.
 
 The Company has let out its property at Chrompet to one of the
 Hospitals from 1st April 2010 at a rental income of Rs.1.50 crs per
 annum. The rental income is being utilized to repay the bank
 borrowings.
 
 The Company has sold one of its non-operational properties during the
 year under review. The sale has fetched a gain of Rs.6.81 crs.
 
 Finance and Accounts
 
 The company has incurred Loss for the year and hence there is no
 provision for Income Tax. The company has not accepted any deposits
 within the meaning of Section 58A and 58AA of the Companies Act 1956.
 
 The Company is in receipt of Rs.2.34 crs as TUF Interest subsidy during
 April 2011. The Company will account the same on Cash basis during FY
 2011-12.
 
 Share Capital
 
 State Bank of India, in its Sanction letter dated 23rd December 2008
 has stipulated that the Promoters will have to bring in Rs.5 crs in
 phases as contribution towards equity. The promoters / directors have
 brought in their second tranche of Rs.3.08 crs during March 2010 and
 April 2010.
 
 The Company has gone for a preferential allotment of 13,71,326 equity
 shares at Rs.22.46persharetoCelebrityConnections(wherein Mr. V.
 Rajagopal and Mrs. Rama Rajagopal, the promoter directors are
 partners), Mr. V. Rajagopal, Chairman of the Company and Mr. S. Surya
 Narayanan, Managing Director of the Company during August 2010. The
 allotment was approved by the Shareholders in the Extra-Ordinary
 General Meeting held in August 2010.
 
 Further, pursuant to ESOP Scheme, the Company has allotted 20,000
 equity shares on conversion of options exercised by employees.
 
 Consequent to the above, the Share Capital of the Company has increased
 by Rs.1.39 crs.
 
 Dividend
 
 In view of the business loss for the year, no dividend is being
 recommended
 
 Personnel
 
 The Board wishes to place on record its appreciation to all the
 employees in the Company for their sustained efforts and contributions
 in the current Challenging Scenario. The Company has an excellent young
 energetic team
 
 Directors
 
 The Shareholders approved the re-appointment of Mr. V. Rajagopal as
 Managing Director of the Company with a monthly Remuneration of
 Rs.2,00,000/- (Rupees Two lakhs only) in accordance with the
 requirements of Schedule XIII of the Companies Act, 1956 in the Annual
 General Meeting held in September 2010. Mr. V. Rajagopal is also the
 Managing Director of Indian Terrain Fashions Limited (Demerged Entity).
 
 Pursuant to the Demerger of the domestic division, from the Company the
 Board of Directors felt the need for separate Managing Directors for
 greater focus on the operations of the two different companies.  Hence
 the Board recommended and unanimously approved the appointment of Mr.
 S. Surya Narayanan as the Managing Director of the Company we.f 29th
 March 2011 and with a monthly remuneration of Rs.2,00,000/- (Rupees Two
 lakhs only) subject to the approval of the Shareholders in the ensuing
 Annual General Meeting.
 
 Consequent to the appointment of Mr. S. Surya Narayanan as Managing
 Director of the Company, Mr. V. Rajagopal has resigned from the
 position of Managing Director of the Company with effect from 29th
 March 2011. Mr. V. Rajagopal continues to be the Chairman of the
 Company.
 
 Pursuant to Section 255 of the Companies Act, 1956, Mr. N.K.  Ranganath
 and Mrs. Nidhi Reddy, retire by rotation at the ensuing Annual General
 Meeting and being eligible, offer themselves for re- appointment.
 
 Auditors
 
 M/s Anil Nair & Associates, Chartered Accountants, Chennai and M/s
 CNGSN & Associates, Chartered Accountants, Chennai, the Joint Auditors
 of the Company, retire at the ensuing Annual General Meeting and are
 eligible for re-appointment.
 
 Corporate Governance Report and Management Discussion and Analysis
 Statement
 
 A report on Corporate Governance is attached to this Report as also a
 Management Discussion and Analysis statement.
 
 Particulars as per Section 217 of the Companies Act, 1956
 
 A) Pursuant to the requirement of Section 217 (2AA) of the Companies
 Act, 1956 and based on the representations received, your Directors
 hereby confirm that:
 
 i. In the preparation of the Annual Accounts for the year ended 31st
 March 2011, the applicable Accounting Standards have been followed and
 there are no material departures;
 
 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 at the end of the financial year and of the profit or
 loss of the Company for that period;
 
 iii. The Directors have taken proper and sufficient care for
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 iv. The Directors have prepared the Annual Accounts on a going concern
 basis.
 
 B) During the year under review, there were no employees covered under
 the provisions of Section 217(2A) of the Companies Act, 1956 read with
 Companies (Particulars of Employees) Amendment Rules, 2011.
 
 C) The information pursuant to Section 217 (1) (e) of the Companies
 Act, 1956 read with Companies (Disclosure of Particulars in the Report
 of the Board of Directors) Rules, 1988 is given below:
 
 i.  Conservation of Energy:
 
 The operations of the Company are not energy-intensive.
 
 However, wherever possible, the Company strives to curtail the
 consumption of energy on a continuing basis.
 
 ii.  Technology absorption: Not applicable.
 
 iii. Foreign Exchange Earning and Outgo:
 
 Total Foreign exchange earned
 
 (FOB Value)                          Rs.16,972.07 lakhs
 
 Total Foreign exchange outgo         Rs. 4,520.76 lakhs
 
 
 Employee Stock Option Plan
 
 The Company has granted Employee Stock Options under Plans ESOP Scheme
 2005, ESOP 2007 and ESOP 2007 (2) and in accordance with SEBI ESOP
 Guidelines. As at the year end, there are no Options outstanding. The
 details of Options allotted / exercised / lapsed / surrendered forms
 part of the Notes to Accounts to the Financial Statements [Note II
 (10)].  
 
 Appreciation
 
 The Directors are sincerely thankful to you - the esteemed
 shareholders, customers, business partners, financial / investment
 institutions and commercial banks for the faith reposed and valuable
 support provided by them in the Company and its Management. The
 Directors wish to place on record the co-operation extended and the
 solidarity shown by the employees in assisting the organization to
 control its losses and contributing for a good turnaround. The
 Directors thank the Banks, particularly State Bank of India for all
 their sustained support throughout the journey of the Company.
 
                                 For and on Behalf of the Board
 
                                                   V. RAJAGOPAL
 
 Chennai, 30th May 2011                                Chairman