Dear Shareholders,
 
 It gives me immense pleasure to share with you my perception of the
 global textile business and the Vardhman Croups in itiatives on overal
 I growth and operational excellence. I must confess this year is
 unusual for the economy and the textile business.
 
 Indian economy is most likely to witness GDP growth of less than 8
 percent in 2011 -12 after consistently remaining above 8% in last
 couple of years. Slowing down of industrial growth caused by the
 tightening of monetary policy to curb unabated increase in inflation is
 one endogenous factor for the lower GDP estimates for FY2011-12. On the
 other side, sluggish recovery in global economy especially in developed
 world has acted as exogenous factor for the present economic situation.
 
 The Indian textile industry too has been facing unprecedented period of
 difficulty due to slowing down in the demand especially from the
 beginning of current financial year 2011-12. The uncertainties in the
 export policy of Government of India related to cotton fiber and cotton
 yam have added to the woes of the textile industry. The restrictions
 imposed on cotton yarn exports in the last quarter of FY2010-11 led to
 huge accumulation of cotton yarn inventory with the mills leading to
 crashing of yarn prices even after exports allowed from April 2011. The
 financial stress caused by aforesaid developments is likely to reflect
 in the reduced profitability of the textile industry in the country in
 FY2011-12.
 
 Nevertheless, we are confident about the bright future of textile
 industry in long term under conducive policy environment. At present,
 this industry in India is one of the most modern as compared to our
 competitors such as China and Pakistan. The sub group set up by the
 Ministry of Textiles on fiber has estimated that the industry will need
 35 Million plus spindles till 2020 to produce additional 4000 Million
 Kg of Yarn which will double our present production.
 
 Vardhman Group is shaping itself well to meaningfully participate in
 emerging opportunities for Indian textile industry in medium to long
 run. We are also responding to the current challenges of rising costs
 and nearly stagnant demand both at domestic and export market,
 reflected in abnormally lower prices as well less inquiries for new
 orders. The prevailing business scene is a tough learning period to be
 nimble and responsive to the changing market dynamics. The company has
 initiated a process of reviewing systems and processes across the
 businesses with the objective of identifying scope of improvement for
 cost cutting and higher value addition. I believe that with the
 collective efforts, the company should emerge stronger through adaptive
 learning which also can reassure relatively a sustained performance.
 
 With best wishes,
 
 (SHRI PAUL OSWAL) 
 Chairman & Managing Director