The Directors hereby submit their Report with the Audited Accounts of
 the Company for the year ended 31st March, 2001.
 
 FINANCIAL RESULTS:
                                                        (Rs. in Lakhs)
                                               Current        Previous
                                            year ended      year ended
                                            31st March      31st March
                                                  2001            2000
 
 Turnover:
 
 Sales/Service and
 other Income                                     2726            5702
 
 Income from sales of TDR                            -            1242
 
 Total                                             2726           6944 
 
 a) Less before
 interest and 
 Depreciation                                      1836          2376 
 
 b) Add: Interest                                   394           493
 
 c) Loss before depreciation                       2230          2869   
 
 d) Add: Depreciation                               226           240
 
 e) Loss for the year                              2456          3109 
 
 f) Add: Prior year
 adjustments                                          -            34
 
 g) Add: Cumulative
 Loss brought forward
 from previous year.                               7456          4313      
 
 h) Cumulative Loss carried
 to Balance Sheet                                  9912          7456
 
 OPERATIONS AND FINANCE:
 
 2. Gross income during the year decreased to Rs. 27.26 crores as
 compared to that of Rs. 57.02 crores during the previous year. The
 operations of the Company came to complete halt in November, 2000.  The
 BIFR issued show cause notice for charge in Management as the
 operations were not viable in the Company has no resources to continue
 the loss generating activities. The promoters after investing a huge
 amount of funds could include that it will not be possible on their
 part to revive the Company. The Company was operating at a loss of
 approximately R. 2 Crores per month which required a cash infusion of
 the like amount. There had not been any source of funds from any comer
 and the Company's operation came to a complete halt.
 
 The total cumulative losses at the end of 31.03 2001 reached to a level
 of Rs. 99.12 Crores as against the Share Capital of Rs. 7.80 crores
 only.  The operating agency IDBI, the Company's Bankers Bank of Baroda
 and the BIFR came to the conclusion that the operations of the Company
 can not be made viable in the present circumstances. The BIFR therefore
 recommended to the Honourable High Court, Mumbai for the winding up of
 the Company.
 
 In view of the closure of operations and non availability of the funds
 for meeting the liabilities, the working environment became
 non-conductive and the management could not access the records and
 information. As such the Accounts for the year ended 31.03.2001 have
 been prepared based on the records available with the management. The
 same has been reported by the Auditors in their report.
 
 BIFR
 
 3. The BIFR at the hearing on 5.2.2001 came to the conclusion that the
 company was not likely to make it's net worth exceed its accumalated
 losses within a reasonable time while meeting its financial obligations
 and that the Company as a result thereof was not likely to became
 viable in future. Hence it was just, equitable and in the public
 interest that it should be wound up. This opinion was forwarded to the
 Honourable High Court, Mumbai, RMMS, the recognised Union has filed an
 appeal against the order of BIFR. The appellate authority AAIFR
 rejected the appeal of RMMS. However, at the instance of representative
 Union and with the initiative of the Government authorities a Committee
 has been set up to explore ways and means to generate liquidity out of
 assets of the Company and to meet liabilities of the workers and
 creditors with the approval of the Honourable High Court.
 
 WINDING UP:
 
 4. Consequent to the recommendations of the BIFR, Bank of Baroda filed
 an application before the Honourable High Court, Mumbai for orders for
 winding up of the Company. The hearing is continuing.
 
 The Honourable High Court, Mumbai has appointed Court Receiver, who has
 taken possession of some of the assets of the Company.
 
 IDBI also filed an application before the Debt Recovery Tribunal (DRT).
 The matter has been heard by the Tribunal and it has been adjourned for
 further hearing.
 
 One of the creditors who was holding a Decree against the Company since
 1997 also moved the High Court, Mumbai for recovery of their dues.
 
 INSURANCE
 
 5. The Company's fixed assets are insured by the first charge holders
 i.e. IDBI and request has been made to bank of Baroda for the insurance
 of the current assets including inventories.
 
 DIRECTORS:
 
 6. In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, Mr. K. C. Mehra retires by
 rotation at the ensuing Annual General Meeting and is eligible for
 re-appointment. The Board commends his appointment.
 
 The BIFR has withdrawn the nomination of Mr. R. S. Rathore as their
 Nominee and he ceased to be a Director of the Company with effect from
 30st August, 2001. The Board placed on record its sincere appreciation
 of the valuable services rendered by them.
 
 SUBSIDIARY:
 
 7. COROMANDEL GARMENTS LTD. (CGL):
 
 The operations of the subsidiary Company remain suspended since
 13.5.1999. In the mean time, as part of the Revival Scheme submitted to
 BIFR, 532 employees were sent way on Early Retirement Scheme (ERS).
 
 BIFR has convened the meeting on 16.4.2001 for discussing the Draft
 Revival Scheme (DRS) circulated to all concerned. At this meeting the
 management of subsidiary Company informed BIFR that the parent company
 M/s. The Svadeshi Mills Company Limited, which was also declared as a
 sick company (Case No. 50/98) was referred to Mumbai High Court by BIFR
 for initiating the winding up proceedings and this has stalled the
 promoter support to see through the smooth implementation of Revival
 Scheme. Consequently BIFR had directed the Operating Agency (OR) to
 advertise in the news papers calling for change of management of
 subsidiary Company. Accordingly the Operating Agency (M/s. Bank of
 Baroda) advertised in the news papers on 30.5.2001 and invited offers
 for change of management. Unfortunately, there was no response to the
 advertisement released by the operating agency. In the mean while, the
 employees of Coromandel Garments Limited came together and framed an
 Employees Industrial Co-Operative Society and submitted a Revival
 Proposal to BIFR through the Operating Agency.
 
 A Notice dated 24.10.2001 from BIFR directing the management of
 subsidiary Company to show cause as to why winding up notice should not
 be issued in view of the considerable delay on the part of the
 subsidiary Company in finishing Rehabiliation Proposal.
 
 The subsidiary Company has since submitted a reply to BIFR in response
 to their notice.
 
 AUDITORS AND AUDIT REPORT:
 
 8. Your are required to appoint Auditors for the current year and
 authorities the Board to fix their remuneration. The retiring Auditors,
 Messrs A. F. Ferguson & Co., Chartered Accountants offer themselves for
 re-appointment as the Auditors of the Company. Having regard to the
 provisions of Section 224A of the Companies Act, 1956, the appointment
 is required to be passed by a Special Resolution.
 
 The Auditors in their report to the Members have made observations and
 qualifications to be read with the Notes to the Accounts. The Auditors
 have also stated that all the records and documents are not accessible
 and that the financial statements have been prepared by the Company
 based on the records available with the Company.  Accordingly, the
 Auditors have not been able to carry out their normal Audit Procedures
 and checks and accordingly their reports are based on the Examination
 of the records produced to them and available with the management. In
 the present circumstances as explained above, the Board had no other
 option but to complete the accounts with the available information. The
 observations of the Auditors in their report read with the Notes to the
 Accounts are self explanatory and it is not possible to take any
 further corrective steps and comment in view of the non-availability of
 the human resources.
 
 DIRECTOR'S RESPONSIBILITY STATEMENT
 
 9. Pursuant to the provisions contained in Sub-section (2AA) of Section
 217 of the Companies Act, 1956, the Board reports to the members of the
 Company that, to the best of their knowledge and belief and subject to
 paragraph 8 above:
 
 a. in the preparation of the annual accounts, the applicable accounting
 standards had been followed along with proper explanation relating to
 material departures;
 
 b. the Directors had selected such accounting policies and applied them
 consistently and 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 at the end of the financial year and of the profit or loss
 of the Company for that period.
 
 c. the Directors has taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities;
 
 d. the Directors had prepared the annual accounts on a going concern
 basis.
 
 PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956
 
 10. The Company has no employee drawing a remuneration of Rs.
 12,00,000/- p.a. and/or Rs. 1,00,000/- p.m., if employed for a part of
 the year.  Hence Section 217 (2A) of the Companies Act, 1956 with the
 Companies (Particulars of Employees) Rules, 1975 does not apply.
 Particulars of Energy, Technology and Foreign Exchange pursuant to
 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 is set out in the Annexure A hereto and forms part of this report.
 
 COST ACCOUNTING RECORDS (COTTON TEXTILES) RULES, 1977:
 
 11. Being in Textile business the above Rules are applicable to the
 Company. The necessary books of accounts and cost records prescribed
 under Section 209(1)(d) of the Companies Act, 1956 have generally been
 maintained but could not be made available to the Cost Auditors.
 
 ACKNOWLEDGEMENT:
 
 12. The Directors thank the Company's Bankers, Bank of Baroda and the
 Industrial Development bank of India (IDBI) for the help and
 co-operation. The Directors also acknowledge and appreciate the
 continued trust and confidence reposed by the Shareholders on the
 Company. The Directors wish to thank all the employees for their
 support under extremely difficult circumstances.
 
 Statement containing particulars pursuant to the Companies (Disclosure
 of particulars in the Report of Board of Directors) Rules, 1988.
 
 A. Conservation of Energy:
 
 (i) Measures undertaken during the year were continuation of proposals
 initiated during the earlier year.
 
 (ii) Additional investments and proposals include implementation and
 installation of equipments already purchased subject to availability of
 funds for completion of these project.
 
 (iii) The impact of the measure will be to reduce consumption of power
 and reduction in the cost of manufacture.
 
 B, Technology Absorption and Research and Development
 
 (a) Research and Development
 
 1. Specific areas in which R & D carried out by the Company.
 
 2. Benefits derived as a result of the above R & D.
 
 3. Future plans of actions.
 
 4. Expenditure on R & D - Rs. in Lakhs - Nil.
 
 (b) Technology Absorption, Adoption and Innovation.
 
 (c) Foreign Exchange Earnings and Outgo: (Rs. in Lakhs) Current
 Previous Year Year
 
 Foreign Exchange Earnings               Nil              9.58
 
 Foreign Exchange Outgo                  Nil            159.95
 
 Due to the difficult situation prevailed during the whole year and the
 total closure of operations from November, 2000, no steps would be
 taken on the above matters as the same was not feasible.