Dear Shareholders,
 
 Our passion to excel: We will endeavour to sustain our growth momentum
 through volume-led and value-driven initiatives.
 
 AS WE STEP INTO OUR 50TH YEAR, MY EXCITEMENT STEMS FROM UNPRECEDENTED
 OPPORTUNITIES.
 
 From a macro perspective: China is likely to grow at 6.9% over two
 decades while India is likely to grow at an average of 9.3% over the
 same period (Source: Standard Chartered) to reach an estimated USD30
 trillion in size by 2030. It has been our experience that rapid
 national expansion inevitably translates into high growth of a number
 of downstream sectors.
 
 Affluence: Credible estimates suggest that India''s normal private final
 expenditure could rise from USD790 billion to USD3.6 trillion by 2020,
 based on the following realities: More than doubling of median
 household income to about USD8,000 by 2020, near-doubling of India''s
 middle-class and upper-middle class households to 110 million by 2020,
 addition of 70 million workers over five years and India''s emergence as
 the largest and youngest working-age country.
 
 Rural boom: India''s rural middle-class is expected to grow
 significantly, benefiting from a shift in farm to non- farm income, the
 trickle-down benefit of government schemes, increased savings and a
 larger share of discretionary spending.
 
 These initiatives are expected to translate into increased fabric
 offtake over the foreseeable future.
 
 Medium-term outlook
 
 India is expected to emerge as a dominant global yarn player (cotton
 and man-made fibre).
 
 Cotton yarn: The global textiles manufacturing industry shifted to Asia
 due to significant cost savings arising from abundant cotton production
 and attractive wage arbitrage. Earlier, India, China, Bangladesh and
 Pakistan dominated the global cotton textiles market, but the focus is
 now shifting to India. India is one of the few cotton- surplus
 countries, driven primarily by an increase in acreage and yield growth,
 following a higher BT cotton penetration (about 90%).
 
 Man-made fibre yarn: Credible estimates suggest that MMF consumption
 will increase at a 7% CAGR between 2010 and 2014, due to a widening
 price differential between cotton yarn and MMF yarn. The ratio of
 cotton yarn prices to MMF yarn prices increased to 1.7x in 2010
 compared with the average range of 1.2x (in the past decade), which
 could result in increased substitution. The Indian domestic fibre
 consumption ratio stood at 41:59 (FY09) in favour of cotton compared
 with about 60:40 globally.  The global fibre consumption trend is
 likely to tilt in favour of MMF on account of limited cotton acreage.
 India is the second-largest global producer of MMF.
 
 Denim: Denim production capacity is expected to grow 12% annually from
 640 million metres to 1,130 million metres by 2015. The denimwear
 market is expected to grow from USD1 billion to USD2.1 billion by 2015,
 catalysed by demographics and urbanisation.
 
 Fabric: Global textile trade is expected to grow from USD510 billion in
 2009 to USD1,000 billion by 2020 (Source: McKinsey). The Indian
 textiles industry is expected to more than triple from USD70 billion
 (USD47 billion domestic and USD23 billion exports) in 2009 to USD220
 billion (USD140 billion domestic and USD80 billion exports) by 2020,
 with a corresponding increase in global market share from 4.5% to 8%.
 
 Medium-term strategy
 
 Our LAKSHYA 2016 target should make us a USD1 billion conglomerate.  We
 are attractively placed for this to happen: We enjoy a 35% share of the
 polyester yarn segment and a dominant position in yarn exports
 (including special high-value yarns).  We are investing Rs.1,500 crore
 in capacity expansion (largely yarn); we expect to add sophisticated
 spinning equipment that will take our spindle capacity to 700,000,
 retaining our position as India''s second-largest spinning company
 (70,000 additional spindles to commence operations in 2011-12). We will
 enhance our denim installed capacity from 14 million metres per annum
 to about 18 million metres per annum and expect to commission a
 spinning facility dedicated to denim manufacture, strengthening our
 integration and profitability.
 
 We believe that this blueprint will graduate the Company into a truly
 global enterprise over the foreseeable future.
 
 Ravi Jhunjhunwala 
 
 Chairman