Dear Members,
 
 The Directors have pleasure in presenting the Twenty First Annual
 report of the Company together with the standalone and concolidated
 audited statments of Financial Account for the year ended March 31,
 2011.
 
 FINANCIAL HIGHLIGHTS:
 
 The following table gives the financial highlights of your company on a
 standalone basis according to the Indian Generally Accepted Accounting
 Principles (GAAP)
 
 FINANCIAL RESULT (STANDALONE)                          (Rs. in Lacs)
 
 Particulars                                     2010-11      2009-10
 
 Net Sales & Other Income                       1,13,971       85,274
 
 Profit before Interest, Depreciation & Tax       22,849       16,499
 
 Financial Overheads                               9,345        4,965
 
 Depreciation                                      2,362        1,722
 
 Net Profit before Tax & Prior Adjustment         13,142        9,812
 
 Prior Period Adjustment                             351           81
 
 Net Profit before Tax                            12,791        9,731
 
 Provision for Tax
 
 — Current                                           591          364
 
 — Deferred                                          194          248
 
 Tax for earlier years                                 —           71
 
 Net Profit after tax                             12,006        9,048
 
 Appropriations
 
 Proposed Dividend                                   504          504
 
 Provision for Tax for dividend                       83           86
 
 Surplus carried forward to Balance Sheet         11,419        8,458
 
 Transfer to General Reserve                       3,500        3,500
 
 Net Surplus carried forward to
 
 Balance Sheet                                     7,919        4,958
 
 FINANCIAL RESULTS (Consolidated)
 
 The following table gives the financial highlights of your company on a
 Consolidated basis according to the Indian Generally Accepted
 Accounting Principles (GAAP)
 
                                                   (Rs. in Lacs)
 
 Particulars                                  2010-2011       2009-10
 
 Net Sales & Other Income                      1,14,052        85,274
 
 Profit before Interest, Depreciation & Tax      22,803        16,430
 
 Financial Overheads                              7,345         4,965
 
 Depreciation                                     2,364         1,722
 
 Net Profit before Tax & Prior Adjustment        13,094         9,743
 
 Prior Period Adjustment                            351            81
 
 Net Profit before Tax                           12,743         9,662
 
 Provision for Tax
 
 — Current                                          591           364
 
 — Deferred                                         194           249
 
 Tax for earlier years                                —            71
 
 Net Profit after tax before Minority Interest   11,958          8978
 
 Minority Interest in Income                       0.85             —
 
 - Net Profit after Tax & Minority Interest      11,957          8978
 
 Appropriations
 
 Proposed Dividend                                  504           504
 
 Provision for Tax for dividend                      83            86
 
 Surplus carried forward to Balance Sheet        11,370         8,388
 
 Transfer to General Reserve                      3,500         3,500
 
 Net Surplus carried forward to Balance Sheet     7,870         4,888
 
 RESULTS OF THE OPERATION
 
 The gross sales and other income for the financial year under review
 were Rs.113971 lacs as against Rs. 85274 lakhs for the previous
 financial year registering an increase of 33.65%. The Profit before tax
 (after interest and depreciation charges) of Rs.12791 lakhs as against
 Rs. 9731 lakhs for the previous year increasing by 31% and Profit after
 tax of Rs. 12006 lakhs as against Rs. 9048 lakhs for the previous year
 increasing by 32% respectively.
 
 DIVIDEND
 
 Your Directors have recommended dividend of Rs. 2.00 for every equity
 share of Rs.10 each resulting in a dividend rate of 20% for the
 financial year 2010- 11.
 
 BUSINESS
 
 The Company''s main operations consist of manufacturing Toys and Home
 Furnishings.
 
 SUBSIDIARY
 
 The Hanung (Shanghai) Limited and Cody Direct Corp. are subsidiary of
 the Companies within meaning of Section 4 of Companies Act 1956.
 
 CORPORATE GOVERNANCE
 
 Report on Corporate Governance as required under Clause-49 of the
 Listing Agreement with the Stock Exchanges, forms part of the Annual
 Report.
 
 A Certificate from the Auditors of the Company M/s. Rohtas & Hans,
 Chartered Accountants, confirming compliance with the conditions of
 Corporate Governance as stipulated under the aforesaid Clause- 49,
 forms part of the Annual Report.
 
 TRANSFER TO GENERAL RESERVES
 
 Out of the total profit of Rs. 12006 lacs for the financial year 2010-
 2011, an amount of Rs. 3500 lacs is proposed to be transferred to the
 General Reserve. The above transfer to general reserves is in
 compliance to the Companies (Transfer of Profit to Reserves) Rules
 1975.
 
 ACQUISITION OF COMPANY
 
 During the year 2010-11 the company has acquired a controlling stake in
 M/s Cody Direct Corp., a company incorporated under the US laws.  Cody
 Direct Corp. is an 18 years Home Furnishing Marketing and
 Distribution company based at New York, NY
 
 The acquisition completely synergizes with Hanung''s business and its
 growth strategies. Hanung has long desired to enter the U.S. market in
 an aggressive and cutting edge manner. We believe that the acquisition
 of Cody Direct Corp., coupled with Hanung''s strengths as a
 manufacturer, would prove to be the right combination for strong growth
 in this marketplace. It would enable the Company to service its North
 American customers directly and improve its EBIDTA margins.
 
 DIRECTORS
 
 There are six directors on the Board of Directors of the Company.  By
 the terms of Articles of Association, Mr. Radha Krishan Pandey and Col.
 Surinder Kumar Jain, are liable to retire by rotation at the ensuing
 Annual General Meeting and being eligible, offer themselves for
 reappointment.
 
 Brief resumes of the Directors proposed to be re-appointed, their
 expertise in specific functional areas and names of the companies in
 which they hold directorship I membership I chairmanship of the Board
 Committees, as stipulated under clause 49 of the listing Agreement with
 the Stock Exchanges have been provided in the report on Corporate
 Governance.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to the requirements of section 217(2AA) of the Companies Act,
 1956, it is hereby confirmed:
 
 - That in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures.
 
 - That the Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that were 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 the period under review.
 
 - That the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities;
 
 - That the Directors have prepared the annual accounts for the year
 ended March 31, 2011 on a ''going concern'' basis.
 
 AUDITORS
 
 The Auditors, M/s. Rohtas & Hans, Chartered Accountants, retire at the
 ensuring Annual General Meeting and have confirmed their eligibility
 and willingness to accept office, if reappointed.
 
 PUBLIC DEPOSITS
 
 During the year under review, your company has not accepted or renewed
 any fixed Deposit from the public.
 
 AUDITORS QUALIFICATION SYSTEM ON ACCOUNTS
 
 Notice to the accounts, as referred in the auditors report, are self-
 explanatory and consistently followed and therefore do not call for any
 further comments and explanations.
 
 CODE OF CONDUCT COMPLIANCE
 
 Pursuant to Clause 49 of the Listing Agreement entered with the Bombay
 Stock Exchange Limited and the National Stock Exchange of India
 Limited, the declaration signed by the Managing Director affirming
 compliance with the Code of Conduct by the Director''s and senior
 management personnel, for the financial year 2010-11 is annexed and
 forms part of the Directors and Corporate Governance Report.
 
 DISCLOSURE OF EMPLOYEES
 
 As required under Section 217(2A) of the Companies Act, 1956 read with
 the Companies (Particulars of Employees) Rules, 1975 as amended, the
 names and other details have been furnished in an Annexure to this
 Report.
 
 CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
 
 By the terms of 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, the particulars of conservation of energy,
 technology absorption, foreign exchange earnings and outgo are set out
 as an Annexure to this Report.
 
 CAUTIONARY STATEMENT
 
 Statements made in the Report, including those stated under the caption
 Management Discussion and Analysis describing the Company''s plans,
 projections and expectations may constitute forward looking statement
 within the meaning of applicable laws and regulations. Actual results
 may differ materially from those either expressed or implied.
 
 REGISTRAR AND SHARE TRANSFER AGENT
 
 M/s Karvy Computershare Private Limited, Hyderabad, are the Registrar
 and Share Transfer Agent of the Company. Details of the depository
 system and listing of shares are given in the section Additional
 Shareholders Information, which forms a part of the Corporate
 Governance Report and is attached with the Annual Accounts.
 
 ACKNOWLEDGEMENTS
 
 Your Directors would like to place on record their sincere thanks to
 the Company''s clients, vendors, investors and bankers for their
 continued support to the Company during the year. The Directors wish to
 place on record their appreciation of the contributions made by
 employees at all levels.
 
 We thank the government of India, state governments and other
 government agencies for their support and look forward to their
 continued support in future.
 
                                                By order of the Board
 
                                 For Hanung Toys and Textiles Limited
 
 Place : Noida                                     Ashok Kumar Bansal
 
 Date  : August 24, 2011               Chairman-cum-Managing Director