Dear Shareholders,
 
 The Directors present the Annual Report together with the Audited
 Balance Sheet as at 30th September 2012 and the Statement of Profit and
 Loss of CHESLIND TEXTILES LIMITED for the period ended on 30th
 September 2012 (18 months).
 
 COMPANY''S PERFORMANCE
 
 Your Company''s performance during the financial year 2011-12 (18
 months) and financial year 2010-11 is summarized below: 
 
 FINANCIAL RESULTS:
 
                                                      (Rs. lakhs) 
 
                                           2011-12       2010-11 
                                         (18 months)   (12 months)
 
 Turnover
 
 Export                                       15675         10893
 
 Domestic                                      9188          7604
 
 TOTAL                                        24863         18497
 
 Profit/(Loss) before Interest &
 
 Depreciation                                    (6)         3191
 
 Less : Interest                               1887          1083
 
 Profit/(Loss) before Depreciation            (1893)         2108 
 
 Less : Depreciation                           1227           935
 
 Profit/(Loss) before Tax and
 
 Exceptional Items                            (3120)         1173
 
 Less : Exceptional Items                        -            -
 
 Profit/(Loss) before Tax                     (3120)         1173
 
 Less: Income Tax earlier years                 (33)          -
 
 Profit/(Loss) after Tax                      (3087)         1173
 
 Add : Opening Balance                         (348)        (1521)
 
 Loss Carried Forward                         (3435)         (348)
 
 OPERATIONAL PERFORMANCE
 
 The year 2011-12 was a highly challenging year and the performance of
 the Indian cotton textile industry got affected badly from April 2011
 on account of Government policy decisions about export of cotton and
 cotton yarn during FY 2010-11. International and domestic Cotton prices
 crashed from the peak of Rs.62,500 per candy in March 2011 to Rs.32,000
 per candy by June 2011. The Government''s ban on export of Cotton Yarn
 during December 2010 to March 2011 resulted in accumulation of yarn
 stocks with the mills and yarn prices got dropped by over 40% in the
 first 3 months of the FY 2011-12. During the year the interest costs on
 the borrowings also increased. High cost raw material stocks, drop in
 yarn prices and high interest costs have led to steep fall in the
 profits in the FY 2011-12.
 
 Consequent to losses suffered during the first half of the FY 2011-12,
 the Company approached financial institutions and banks for
 restructuring of debt. Bankers agreed for this and debts have been
 restructured under CDR Mechanism which was approved in March 2012. As
 part of the CDR scheme, the promoter''s loan to the company was
 converted into equity and also the promoters have brought in additional
 equity as per the CDR Scheme.
 
 The power situation in the state of Tamil Nadu remained critical
 causing regular power cuts, load shedding and peak hour restrictions.
 The power rate was increased from Rs.4.84 per unit to Rs.6.47 per unit
 w.e.f 01.04.2012. Captive power generation become unviable due to high
 HFO cost. Due to Southern Grid Corridor problem and load restrictions,
 even IEX power available in Northern grid could not be bought.
 
 The lenders have reduced the interest rates on the loans as per the CDR
 Scheme. The Company also entered into an agreement with wind power
 generators for a long term supply of power at competitive price.  The
 operational team of unit at Bagalur took various measures to
 debottleneck the production process and have increased production from
 21 MT per day to 23 MT per day.
 
 All these measures lead to improvement in the performance of the
 Company from April 2012.
 
 Looking to CDR approval and its implementation, the Company decided to
 extend the accounting year from 31st March 2012 to 30th September 2012,
 therefore 18 months accounts have been made for the financial year
 2011-12.
 
 DIVIDEND
 
 Your Directors are unable to recommend any Dividend on the Equity
 Shares in view of the financial position of the Company.
 
 CORPORATE GOVERNANCE:
 
 Your company is committed to good Corporate Governance practices.  Your
 Directors Endeavour to adhere to the standards set out by the
 Securities and Exchange Board of India''s (SEBI) Corporate Governance
 practices and accordingly has implemented all the major stipulations
 prescribed. The Practicing Company Secretary''s certificate dated 13th
 October 2012 in line with Clause 49 of the Stock Exchange Listing
 Agreement is attached to this report.
 
 CONTRIBUTION TO THE EXCHEQUER
 
 Your company has contributed an amount of Rs.246.05 lakhs in terms of
 taxes and duties to the exchequer.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
 state that:
 
 - in the preparation of the Annual Accounts the applicable Accounting
 Standards have been followed;
 
 - appropriate Accounting Policies have been selected and applied
 consistently and they have made judgments and estimates that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company on 30th September 2012 and of the
 
 Profit and Loss of the Company for the period ended on that date;
 
 - proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities;
 
 - the Annual Accounts have been prepared on a going concern basis.
 
 CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
 EARNINGS AND OUTGO:
 
 The information required to be disclosed pursuant to Section 217(1)(e)
 of the Companies Act, 1956 read with Companies (Disclosure of
 Particulars in the report of Board of Directors) Rules, 1988, is given
 in Annexure which forms part of the Report.
 
 DIRECTORS
 
 The following Directors retire by rotation and being eligible offer
 themselves for re-appointment:
 
 - Mr. Prakash Maheshwari
 
 - Mr. S C Parasrampuria INTERNAL CONTROL SYSTEMS
 
 The Company has in place proper, adequate and effective Internal
 Control Systems commensurate with the nature and size of its
 operations, to ensure that all systems and procedures are functioning
 satisfactorily and all policies are being duly complied with. The
 operations of the Company are regularly reviewed by the Audit
 Committee, which examines and evaluates the adequacy, relevance and
 effectiveness of the Internal Control Systems and its compliance with
 prevailing laws and regulations. The Audit Committee makes appropriate
 recommendations for improvement in efficiencies and effectiveness of
 the Internal Control Systems.
 
 PARTICULARS OF EMPLOYEES
 
 There is no employee drawing remuneration falling within the limits
 specified under Section 217(2A) of the Companies Act, 1956 hence no
 statement is enclosed.
 
 AUDITORS
 
 The Company''s Auditors M/s. K P Rao & Company, Chartered Accountants
 and M/s. M Bhaskara Rao & Company, Chartered Accountants retire at the
 conclusion of the ensuing Annual General Meeting of the Company and
 being eligible, offer themselves for re- appointment.
 
 ACKNOWLEDGEMENTS
 
 Your Directors take this opportunity to express their gratitude and
 thank the Customers, Dealers and Suppliers, Investors, Members, Banks,
 Financial Institutions, Central and State Governments for their
 continued support and co-operation. Your Directors also thank the
 employees of the Company across all levels for the sincere and hard
 work put in by them during the year under review.
 
                                        For and on behalf of the Board
 
 Place : Bangalore                                   Ravi Jhunjhunwala
 
 Date : 18th October 2012                                     Chairman
 
                                                          DIN-00060972