DIRECTORS'' REPORT TO SHAREHOLDERS
 
 Ladies and Gentlemen,
 
 The Directors present the 22nd Annual Report of the Company along with
 the audited statement of accounts for the year ended 31st March 2011.
 
 FINANCIAL RESULTS
  
                                                          (Rs in lakhs)
                                                 31-3-2011   31-3-2010
 
 Sales Turnover
 
                                                 20838..45   14,294.03
 
 Profit / Loss before Interest, 
 Depreciation and Tax
                                                   2455.18      992.29
 
 Less : Interest                                   2411.04    2,760.18
 
 Depreciation                                      1831.69    1,801.17
 
 Net Profit/loss for the year                     (1787.56)  (3,569.06)
 
 Add : Loss brought forward from previous year    (6884.46)  (3,641.47)
 
 Taxes of prior years                                 0.60      ---
 
 Prior Year adjustment – Income                       ---       ---
 
 Investment Fluctuation Reserve reversed              ---         0.23
 
 Extraordinary Items                                698.75      ---
 
 Less : Taxes of prior years                          ---        (0.33)
 
 Profit / Loss available for Appropriation             
                                                  (7972.67)  (7,210.63)
  
 Appropriation :
 
 Provision for Taxation - Wealth Tax                  0.75        0.50
 
 Provision for Deferred Tax Liability / Asset       296.72     (326.67)
 
 Deficit carried over to Balance Sheet            (8270.14)  (6,884,46)
                                                  (7972.67)  (7,210.63 )
 
 PERFORMANCE
 
 The performance of the company during the year under review has been by
 far the best in the period for the past 6 years. The working resulted
 in a cash profit before interest and depreciation of Rs.24,55,17,828/-
 as against Rs.9,92,28,927/- earned in the immediately preceding year.
 However against this profit, interest of Rs.24,11,04,253/-
 (Rs.27,60,18,498/- previous year) and depreciation of Rs.18,31,69,238/-
 (Rs.18,01,16,930/- previous year) are to be charged. After charging
 these two items, the working has resulted in a net loss of
 Rs.17,87,55,671/- as against a loss of Rs.35,69,06,501/- incurred in
 the immediately preceding year.
 
 After adjustments for extra-ordinary items and taxes of prior years,
 etc., the company has a net loss of Rs.82,70,14,270/- as loss to be
 carried forward to the next year as against a loss of Rs.68,84,46,217/-
 brought in from the previous year. The performance during the year
 under review, the conditions in the industry as a whole, various
 favorable and unfavorable factors are being discussed in detail in the
 management discussion and analysis.
 
 
 DIVIDEND
 
 In view of the carry forward loss being more than 50% of the net worth
 of the company, dividend is not being declared for the year under
 review.
 
 PROJECT
 
 The project as it was envisaged has been more or less completed except
 the setting up of a new ring spinning unit at Udumalpet. In view of the
 financial constraints, there has been a change in the project and to
 the extent to which advances are available with the machinery
 suppliers; the project is being re-designed so that there is no
 additional outflow on the score of project implementation.
 
 PROSPECTS
 
 Your Directors, as the year 31.03.2011 came to a close, were of the
 view that, at that rate, the company will be able to overcome its
 problems in a matter of 2 to 3 years. However, during the current year,
 even as the current year went under way, the prices of cotton went
 higher with the result that cotton of a particular quality which was
 available in the month of January-March at a price of around Rs.30, 000
 per candy started climbing and it reached a peak of Rs.64, 000 per
 candy. All large mills anticipating that the prices will go up further
 kept on buying and covering their cotton requirements for long
 duration. This further fueled the cotton prices and the price became
 totally unviable. The working of the company during the first quarter
 of the current year is bound to result in a huge loss because of the
 cumulative effect of high price of cotton, steep drop in the prices of
 yarn, paucity of lab our, erratic power situation, etc.
 
 FINANCE
 
 As the members were informed in the previous year''s report, the company
 had arrived at a debt restructuring. With the fortune of the industry
 going against the company, there was no option for the company than to
 approach the bankers for revised restructuring so that the burden of
 the company in terms of cash outflow will be reduced to manageable
 limits. In spite of that, the company is finding it extremely difficult
 to meet its commitments.
 
 The Directors have come to the conclusion that long term solution for
 the company''s problems lies only in reducing the debt burden thereby
 reducing the interest burden as well. This could be achieved either by
 increasing equity or by disposal of assets. The equity of the company
 is already too huge for the activities of the company and therefore no
 further increase is either justified or warranted. The only option
 would be to dispose off assets and reduce the Debt burden. With this
 end in view, your Directors are adopting a two pronged approach. On the
 one side, discussions are on with the bankers for a possible one time
 settlement of debts due and on the other side, the efforts are in full
 swing to dispose off some of the units as a going concern so that the
 resources for meeting the one time settlement obligations will be
 found. Efforts towards this end are in progress and it is only hoped
 that some positive results will be achieved sooner than later.
 
 
 DEPOSITS
 
 There are no deposits outstanding as on 31st March 2011 remaining
 unclaimed or unpaid. The company has complied with all the requirements
 of Sec.58A of the Companies Act and the rules there under in so far as
 the deposits which were in existence during the earlier period is
 concerned.
 
 LISTINGS
 
 The company''s shares are listed both in National Stock Exchange and the
 Mumbai Stock Exchange. The company has paid listing fee to both the
 exchanges. The company has already applied for de-listing of its equity
 shares to Kolkata Stock Exchange and the Coimbatore Stock Exchange.
 Though all the formalities have been completed and reminders have been
 sent, reply from these 2 stock exchanges are awaited. However no
 listing fee has been paid to these 2 stock exchanges.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 In terms of the requirement of Section 217 (2AA) of the Companies Act,
 1956, the Directors hereby confirm:
 
 i.  that in the preparation of Annual Accounts, the applicable
 Accounting Standards have been followed;
 
 ii.  that 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 accounting year (namely
 March 31, 2011) and of the profit of the Company for that year; 
 
 iii.  that the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provision of the Act, for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities;
 
 iv.  that the Directors have prepared the Annual Accounts on a going
 concern basis.
 
 DIRECTORS
 
 Mr.Ullas R Sanghvi, Director is retiring by rotation at the ensuing
 Annual General Meeting and being eligible, offer himself for
 reappointment.
 
 AUDITORS
 
 M/s.Thakker & Sanghani, Chartered Accountants, retire at the ensuing
 Annual General Meeting and they have given necessary certificate in
 terms of Section 224 (1) (b) of the Companies Act, 1956. They are
 entitled to be reappointed.
 
 
 GENERAL
 
 There are no employees falling under Section 217 (2A) of the Companies
 Act, 1956. The information pursuant to the Company (disclosure to
 particulars in the report of Board of Directors) Rules 1988 to the
 extent applicable is attached.
 
 ACKNOWLEDGEMENT
 
 Your Directors wish to thank and record their appreciation to all the
 Bankers of the Company for their valuable financial support extended to
 the Company as also for the valuable advice and guidance given by them
 for putting the Corporate Debt Restructuring Scheme in place. But for
 their co-operation, this would not have been possible.  Your Directors
 also wish to thank the suppliers and all others who have extended their
 valuable support during times of turbulence. Last but not the least,
 your Directors express their heartfelt thanks for the employees at all
 levels who have stood by the Company in these testing times.
  
                                               By order of the Board 
                                       For GANGOTRI TEXTILES LIMITED
 
                                                MANOJ KUMAR TIBREWAL
                                                   Managing Director
 
 Coimbatore                                        MOHANLAL TIBREWAL
 
 30-5-2011                                        Executive Director