RSWM

The Directors present the Annual Report together with the audited
 Balance Sheet and the Profit and Loss Account of RSWM Limited for the
 year ended 31st March, 2008.
 
 COMPANYS PERFORMANCE
 
 Your Companys performance during year 2007-2008 is summarized below:
 
 FINANCIAL RESULTS
 
                                                        (Rs. in crore)
                                             This Year   Previous Year
 
 Turnover
 Export                                        586.44         532.59
 Domestic                                      587.39         532.10
 TOTAL                                       1,173.83       1,064.69
 Profit before Interest & Depreciation         121.86         116.77
 Less: Interest                                 43.75          20.71
 Profit before Depreciation                     78.11          96.06
 Less: Depreciation                             66.39          47.37
 Add: Surplus Depreciation Written Back           -            16.03
 Profit before Tax and Exceptional Items        11.72          64.72
 Less: Loss on discontinued business            10.30
 Profit before Tax                               1.42          64.72
 Less: Fringe Benefit Tax                        0.93           0.80
 Current Tax                                      -             6.98
 Deferred Tax Liability                          0.22          12.87
 Profit after Tax                                0.27          44.07
 Add: Opening Balance                          106.99          75.84
 Profit available for appropriation            107.26         119.91
 
 DIVIDEND AND OTHER APPROPRIATIONS
 
 From the amount available for appropriation, Rs. 0.10 crore is proposed
 to be transferred to General Reserve.
 
 Your Directors recommend to the Annual General Meeting a dividend of
 1.50 Paise per share on the Redeemable Preference Shares of Rs. 150/-
 each for the year ended the 31st March, 2008. No recommendation is
 being made for any dividend on the Equity Shares of Rs.10/- each. The
 dividend on Redeemable Preference Shares will absorb Rs. 0.43 lac
 (inclusive of distribution tax). The balance amount of Rs. 0.27 crore
 has been carried over to next year. A proposal for confirmation of the
 dividend recommended on Redeemable Preferance Shares for the year ended
 31st March, 2008 will be placed before the shareholders at the ensuing
 Annual General Meeting.
 
 OPERATIONAL PERFORMANCE
 
 The Company registered an increase of 10.25 per cent in its gross
 turnover from Rs. 1065 crore to Rs. 1174 crore during the year 2007-08.
 Production of yarn increased to 84,542 MT in 2007-08 from 73,779 MT in
 the previous year. The Company continues to have exports as its thrust
 area. Accordingly, export sales increased to Rs. 586 crore in 2007-08
 from Rs. 533 crore in 2006-07 whereas the domestic turnover increased
 from Rs. 532 crore in financial year 2006-07 to Rs. 587 crore in
 2007-08. Operating profits of the Company (PBDIT) rose by 4.4 per cent
 from Rs. 117 crore in 2006-07 to Rs. 122 crore in 2007-08. Cash profits
 (PBDT) declined 19 per cent from Rs. 96 crore in 2006-07 to Rs. 78
 crore in 2007-08 mainly due to appreciation of INR, steep increase in
 fibre prices without corresponding increase in realizations.
 
 Detailed analysis of the performance of the Company and its businesses,
 including initiatives in the areas of human resources, information
 technology has been presented in the section on Management Discussion
 and Analysis of this Annual Report.
 
 Working results of the last three financial years (2005-06 to 2007-08)
 are given in Annexure-l, and forms a part of this Report.
 
 EXPANSION AND MODERNISATION
 
 Your Directors in their previous report had underlined the ongoing
 expansion and modernization plans of the Company. Your Directors are
 glad to inform the members the successful completion of the first phase
 of the Denim manufacturing facility including setting up of yarn
 spinning facility for Denim plant at an investment of Rs. 172 crore.
 With the completion of the project the Company is now focusing on the
 marketing and value addition to achieve the optimum benefit from this
 segment. Your Directors also feel immense pleasure in informing the
 Members that Company had entered into a marketing arrangement of denim
 fabric with M/s. Cone Denim USA to market and sell denim in selected
 markets under the brand name LNJ Cone Denim.  Your Directors are
 hopeful that the arrangement will yield good return in future.
 
 DISPOSAL OF GARMENT DIVISION
 
 During the period under review, the Garment Division of the Company at
 Bangalore was sold off after obtaining all the necessary approvals.
 
 POWER DIVISION
 
 During the financial year under review, 46 MW Captive Thermal Power
 Plant at Mordi has commenced commercial production during the quarter
 ended December, 2007.
 
 ACQUISITIONS
 
 RSWM completed the acquisition of M/s. Cheslind Textiles Limited (CTL),
 a listed company engaged in manufacturing of fine cotton yarn with an
 installed capacity of 64,512 spindles at Bagalur (Tamil Nadu) and
 Pondicherry. The acquisition was done by acquiring 1,11,24,354 equity
 shares of Rs. 10 each, constituting 48.17 per cent of the equity
 capital of CTL, at a price of Rs. 25 per share from the promoters; and
 42,24,123 equity shares of Rs. 10 each constituting 18.29 per cent
 voting rights through a public offer at the same price as per SEBI
 (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
 Later with a view to comply with minimum public shareholding, the
 Company disposed 90,577 Equity Shares constituting 0.39 per cent in
 CTL.
 
 CTL became subsidiary of the Company from 30th August, 2007 on
 completion of the acquisition process. The Company now holds
 1,52,57,900 Equity Shares constituting 66.07 per cent of the total
 equity capital of CTL.
 
 During the financial year under review your Company also acquired a
 company in Netherlands by the name of Duindistel Holding B.V, which was
 rechristened later as RSWM International B.V. and it became wholly
 owned subsidiary of the Company w.e.f. 24th April, 2007. It has been
 acquired with a view to use it as Special Purpose Vehicle for
 acquisition and/or formation of Joint Venture for furtherance of the
 Companys business. Later RSWM International B.V. became 50 per cent
 Joint Venture Partner in SISA S.A., Spain (now rechristened as
 RSWM-SISA S.A.), which is into manufacture and marketing of high end
 fashion yam in the European markets.
 
 DE-MERGER
 
 Your Directors have also approved the proposal of demerger of its
 Strategic Investment Division consisting of 66 lac Equity Shares of Rs.
 10/- each in BMD Pvt. Limited into a separate company named Bhilwara
 Technical Textiles Limited, constituted for the purpose. The proposed
 scheme is subject to the approval of the shareholders, creditors,the
 Honble High Court and other appropriate authorities. The Company has
 already initiated necessary steps for giving effect to the proposal.
 
 SUBSIDIARY COMPANIES
 
 A Statement of particulars of the Companys subsidiaries namely
 Cheslind Textiles Limited and RSWM International Limited B.V. is part
 of the Annual Report.
 
 JOINT VENTURE:
 
 INDO CANADIAN CONSULTANCY SERVICES LIMITED (ICCS)
 
 ICCS Ltd. an engineering consultancy company, formed in 1995, for
 providing consultancy to power projects was floated by LNJ Bhilwara
 Group and RSW International, a consultancy company based in Montreal,
 Canada, as a 50:50 joint venture. Your Company, a Joint Venture Partner
 in this consultancy company has transferred its entire stake
 constituting 28.88 per cent of the Equity Shares on 19th February, 2008
 to M/s Bhilwara Energy Limited in order to facilitate creation of
 synergy by integration of power business of the Group.
 
 CONTRIBUTION TO THE EXCHEQUER
 
 Your Company has contributed an amount of Rs. 18.72 crore 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 judgements 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 31st March, 2008 and of the Profit and
 Loss of the Company for the year 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, 1956 for 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.
 
 ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND 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 - II forming part of this Report.
 
 VOLUNTARY DELISTING OF EQUITY SHARES
 
 On application made by the Company for delisting, Calcutta Stock
 Exchange Association Ltd. has granted its in principle approval for
 delisting.
 
 DIRECTORS
 
 The following Directors retire by rotation and being eligible offer
 themselves for re-appointment:
 
 1.  Mr. Ravi Jhunjhunwala
 
 2.  Dr. Kamal Gupta
 
 3.  Mr. Pradeep Dinodia
 
 INTERNAL CONTROL SYSTEMS
 
 The Company has in place proper and effective Internal Control Systems
 commensurating with the size of its operations to ensure that all
 systems and procedures are functioning satisfactorily and all policies
 are being duly complied with as required. 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. The Audit Committee makes recommendations wherever
 found appropriate for improvement in efficiencies and effectiveness of
 the Internal Control Systems.
 
 PARTICULARS OF EMPLOYEES
 
 Statement of particulars of Employees as required to be furnished
 pursuant to Section 217(2A) of the Companies Act, 1956 read with
 Companies (Particulars of Employees) Rules, 1975 is attached hereto and
 form part of this Report as Annexure - III.
 
 AUDITORS
 
 M/s S. Bhargava Associates, Jaipur and M/s A. L. Chechani & Co.,
 Ahmedabad, the Companys Auditors retire at the conclusion of the
 ensuing Annual General Meeting and being eligible, offer themselves for
 re-appointment.  The observations of the Auditors are explained
 wherever necessary, in the appropriate Note to the Accounts.
 
 ACKNOWLEDGEMENTS
 
 Your Directors take this opportunity to express their gratitude and
 thanks to 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 : Noida                                    Ravi Jhunjhunwala
 Date  : 30th April, 2008                              Chairman