IIT Investrust Limited

DIRECTORS' REPORT

The Members,

Your Directors are pleased to present their Seventy Seventh (77th) Annual Report of the Company, together with the audited financial statements for the financial year ended 31st March, 2015.

1. FINANCIAL PERFORMANCE

There was no improvement in the business scenario of the Textile Industry and is continued to remain challenging.

The revenue from operations for the year 2014-15 was Rs. 22,554 lacs as compared to Rs. 27,292 lacs in the previous year. The same is not strictly comparable due to the sale of Baramati Unit during the previous year.

The Financial position of the Company severely affected due to non availability of adequate working capital from the Banks as loans were classified by Banks as non performing assets as Company failed to pay interest and installments consecutively for more than 90 days. This also affected the top line growth of Company.

The loss before Prior period, Exceptional item and tax was Rs. 4,764 lacs against the previous year's loss of Rs. 2,945 lacs.

The net loss for the year was Rs. 3,358 lacs against the net loss of Rs. 1,334 lacs.

2. DIVIDEND

The Board of Directors of your Company do not recommend any dividend for the Financial Year ended March 31, 2015 due to the loss incurred during the year.

3. COTTON

India's cotton production in the current year 2014-2015 estimated as Rs. 380 lac is expected to be highest production in our country. Export of cotton is likely to come down as China, our biggest importer has decided to first consume its reserve stock as a result cotton prices remain reasonably steady.

4. EXPORT

Your Company's export performance in the year under review has improved from the last year mainly on account of denim fabric export. The FOB value of the exports during the Year was Rs. 4,842 lacs against Rs. 5,083 lacs in the previous year.

5. ANALYSIS AND REVIEW

The Indian Textiles industry remains one of the leading sector of the Indian economy in terms of employment and brings valuable foreign currency by exporting Textiles and Garments.

6. OPPORTUNITIES AND CHALLENGES

The government of India has in principle decided to further increase the production of fabrics and garments by way of value addition interest of depending mostly on cotton export. To bring about modernization and competitiveness the government is providing necessary infrastructure to achieve the above objective..

7. EXPANSION AND MODERNISATION

In view of financial constraints equipment valuing X 64 lacs, was mostly spent on balancing production.

8. CASH FLOW STATEMENT

As required under Clause 32 of the Listing Agreement with the Stock Exchange(s), in India, a Cash Flow Statement, as prepared in accordance with the Accounting Standard on Cash Flow Statement (AS 3) issued by the Institute of Chartered Accountants of India (ICAI), is given along with Financial Statement and Statement of Profit and Loss.

9. INSURANCE

Your Company's, properties including its Buildings, Plant & Machinery and Stocks among others are adequately insured against fire, flood, earthquake, explosive and other such risks as considered necessary.

10. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company has a proper and adequate internal control procedure commensurate with its nature of business and the size of operations to ensure the timely and accurate recordings of financial transactions and adherence, to applicable Accounting Standards, optimum utilization & safety of assets, complying with applicable statutes and compliance with Corporate policy(ies). The Audit Committee periodically interacts with the Management, Internal Auditors and Statutory Auditors and tracks the implementation of corrective actions. The Audit Committee oversees the functions of internal auditor and reviews the audit plans, internal control and internal audit reports, submitted by the internal auditors, to examine and evaluate the adequate and effectiveness of the internal control system to further strengthen the internal control systems and procedures. Significant observations, emanating from the audit are acted upon. The Audit Committee of the Board of Directors comprises the majority of Independent Directors.

11. FIXED DEPOSITS

The Company has not accepted deposit from public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposit) Rules, 2014, during the year under report.

12. DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTMENT

Shri M. H. Shah and Smt. N. Loyalka are Non-Executive Directors, designated as Independent Director on the Board of Directors ('the Board') of the Company. With the enactment of the Companies Act, 2013 ('the Act'), it is now incumbent upon every listed company to have the requisite number of Independent Directors on the Board. Shri M. H. Shah has been appointed as an Additional Director, designated as Independent Director of the Company and Smt. Nisha Loyalka has been appointed as an Independent Director in casual vacancy, caused by death of Late Shri B. L. Dhoot, under the Act.

The Company has received two separate Notices in writing from Members along with requisite deposits of money proposing the aforesaid two directors to the office of Directors under the applicable provisions of the Act. The Board recommends the appointment of Shri M. H. Shah and Smt. N. Loyalka, as an Independent Directors of the Company, not liable to retire by rotation, to hold office for a term of five consecutive years with effect from their respective date of appointment.

Necessary resolutions for obtaining approval of the Members in respect of the above appointments have been incorporated in the notice of the forthcoming Annual General Meeting.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The terms and conditions of appointment of the Independent Directors are incorporated on the website of the Company at <http://> www.somatextiles.com

As per the requirement under the Listing Agreement, particulars of Directors seeking re-appointment at the ensuing Annual General Meeting form part of the Notice of the Meeting.

With the enactment of the Companies Act, 2013 ('the Act'), it is now incumbent upon every listed company to have the requisite number of Key Managerial Personnel Shri M. B. Parakh, Deputy General Manager (Head of Finance), has been appointed as Chief Financial Officer (CFO), designated as Key Managerial Personnel by the Board of Directors at their Meeting held on 10th February, 2015, as prescribed under the Act with effect from 10.02.2015.

Cessation

The Company lost one of the guiding Member Late Shri B. L. Dhoot, on 31st October, 2014. He was a Director of the Company since 24th August, 2009. The Company appreciates the invaluable contribution, guidance and inspiration given by Late Shri Dhoot in directing the destiny of the Company.

Shri S. C. Mathur, resigned from the Board of the Company with effect from 9th February, 2015, upon withdrawal of his nomination by IDBI from the Board of Directors of the Company vide its letter no. CBG-SSCB.53/373/Nom.8 dated 5th February, 2015.

The Board recorded its appreciation for the services rendered by Late B. L. Dhoot, as a Non-executive Independent Director and Shri S. C. Mathur, as a Nominee Director on behalf of IDBI, during their association with the Company.

Rotation

Shri S. K. Somany, Director retires by rotation at the forthcoming Annual General Meeting, and being eligible, offers himself for re-appointment in accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company. The Board recommends his re-appointment.

None of the Directors are disqualified from being appointed or holding office as Directors as stipulated under Section 164(2) of the Companies Act, 2013.

13. DECLARATION OF INDEPENDENT DIRECTORS

The provisions of Section 149 pertaining to the appointment of Independent Directors apply to our Company. The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013, so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

14. CORPORATE SOCIAL RESPONSIBILITY

The Company does not fall within the ambit of Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibilities Policy) Rules, 2014. Hence, Corporate Social Responsibility initiatives as required under the said act is not applicable.

15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable.

16. RELATED PARTY TRANSACTIONS

All related party transactions were entered on arm's length basis and were in the ordinary course of business in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Agreement. During the year under review, the Company has not entered into any contract or arrangement or transaction with related parties, which could be considered material in accordance with the policy of the Company on related party transactions. Accordingly no transactions are being reported in Form No. AOC-2 in terms of section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014.

Related Party Transactions Policy as approved by the Board has been uploaded on the Company's website at the web link: www.somatextiles.com/home.php/investors/policies .

None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

17. LISTING ON STOCK EXCHANGES

The Equity Shares of the Company are listed at the following Stock Exchanges:-

(a) BSE Limited (BSE).

Address: Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400001

(b) National Stock Exchange of India Limited (NSE).

Address: Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai-400051.

NOTE:

(i) Listing fees have been paid to the Stock Exchanges for the year 2013-14.

(ii) The Calcutta Stock Exchange Association Ltd. has vide its Letter No. CSEA/ID/223/2008 dated 16th April, 2008, confirmed the delisting of Company's Shares from the official List of their exchange. However Equity Shares have been allowed to be traded under the "Permitted Category" on the Exchange considering the interest of General Investors in the Company.

Stock Code

(i) NSE - SOMATEX, (ii) BSE - 521034, (iii) CSE - 29067. De-mat ISIN Number in NSDL & CDSL - ISIN - INE 314C01013.

18. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

There were no qualifications, reservations or adverse remarks made in the Auditors Report and Secretarial Auditors Report.

19. BOARD'S EVALUATION OF THE PERFORMANCE

In compliance with the Companies Act, 2013, and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the executive and non-executive Directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholders Relationship Committee.

The manner in which the evaluation has been carried out has been given in the Corporate Governance Report.

20. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

During the financial year under review four (4) Board Meetings were convened and held. Details of which are given in the Corporate Governance Report, forming part of this Report.

The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and revised Clause 49(II)(D)(1) of the Listing Agreement.

21. AUDIT COMMITTEE

Pursuant to section 134(3) and section 177(8) of the Companies Act, 2013 the Audit Committee comprises of total four (4) members, namely Shri B. K. Hurkat, as Chairman and Shri S. K. Somany, Shri M. H. Shah and Smt. N. Loyalka as Members. Majority of its members are Non-executive Independent Directors.

During the reporting period under review four (4) Audit Committee Meetings have been convened and held. Details are given in the Corporate Governance Report, forming part of this Report. The Board of Directors accepted all recommendations of the Audit Committee in the reporting period.

22. VIGIL MECHANISM / WHISTLE BLOWER MECHANISM

The Company has established a vigil mechanism, as required under section 177(9) of the Companies Act, 2013 and Clause 49(II)(F), for directors and employees to report genuine concerns about unethical behavior, actual or suspected fraud or violation of the company's code of conduct or ethics policy. The Policy of such mechanism has been circulated to all employees within the Company, which provides a framework to the employees for guide & proper utilization of the mechanism. The Whistle Blower Policy has been published on the Company's website <http://> www.somatextiles.com.

The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of company's employees and the Company. More details about the Whistle Blower Policy (Vigil Mechanism) has been provided in the Corporate Governance Report, forming part of this Report.

The details of the policy have been posted on the website of the Company.

23. REMUNERATION POLICY

The Board has, on recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes, independence of Directors and other matters as per section 178 and Clause 49(IV)(B) of Listing Agreement. The Nomination & Remuneration Policy is stated in the Corporate Governance Report. The Policy is also available on the website of the Company i.e. <http://www.somatextiles.com>.

24. CORPORATE GOVERNANCE

Your Company has complied with requirements under the Corporate Governance as stipulated in the revised Clause 49 of the Listing Agreement with the Stock Exchange(s).

A detailed reports on 'Corporate Governance'pursuant to revised Clause 49 of the Listing Agreement along with an Auditors' Certificate on Compliance with the conditions of Corporate Governance, is annexed and forms part of the Annual Report.

25. CORPORATE GOVERNANCE - VOLUNT ARY GUIDELINES 2009

The Ministry of Corporate Affairs, Government of India, has issued a set of Voluntary Guidelines 2009, for voluntary adoption of a set of good practices by the Corporate Sector in addition to the existing laws for further improvement of Corporate Standards and practices. These guidelines are recommendatory in nature and are expected to serve as a bench mark for the Corporate Sector and help them in achieving the highest Standard of Corporate Governance. These guidelines are reviewed by the Management from time to time to ensure the adherence of the same voluntarily commensurate with the requirements, best suited to your Company gradually in phases.

26. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report under review, as stipulated under revised Clause 49 of the Listing Agreement with the Stock Exchange(s), is presented by virtue of an Annexure, forming part of the Directors' Report.

27. DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, the Board of Directors of your Company to the best of their knowledge and belief and on the basis of information and explanation obtained from the operating management, hereby states and confirms: -

(a) that in the preparation of attached Annual Accounts for the Financial Year ended 31st March, 2015 the applicable Accounting Standards have been followed along with proper explanation relating to material departures, wherever, applicable;

(b) that they have selected the Accounting Policies described in notes to accounts, which have been consistently applied, except where otherwise stated and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2015 and of the loss of the Company for the year ended on that date;

(c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) that they have prepared the attached Annual Accounts on a 'going concern'basis;

(e) that they had laid down internal financial controls to be followed by the Company and that such internal controls are adequate and were operating effectively; and

(f) that they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

28. AUDITORS

M/s Pipara & Company, Chartered Accountants, (ICAI Firm Registration No.107929W), are holding office as the Statutory Auditors of Company up to the conclusion of the ensuing Annual General Meeting and they are eligible for re-appointment.

In terms of Clause 41(1)(g) of the Listing Agreement the Statutory Auditors are subjected to the Pear Review Process of the Institute of Chartered Accountants of India (ICAI) and to hold a valid certificate issued by "Pear Review of the Board" of ICAI and our Statutory Auditors hold a valid certificate by the Pear Review Board of ICAI.

A written consent and a certificate from them has been received to the effect that their re-appointment, if made, would be in accordance with the conditions as may be prescribed under Sub-Section (1) of Section 139 of the Companies Act, 2013 and that they are satisfying the criteria provided in section 141 of the said Act.

The Board proposes the re-appointment of M/s Pipara & Company, Chartered Accountants, as Statutory Auditors of your Company based on the recommendation of Audit Committee to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of next Annual General Meeting.

29. SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made thereunder M/s. Drolia & Company, Company Secretaries, Kolkata, having certificate of Practice No. 1362, has been appointed as the Secretarial Auditor, to conduct a Secretarial Audit of the Company's Secretarial and related records for the year ended 31st March, 2015.

30. MANAGERIAL REMUNERATION

Details of the ratio of the remuneration of each director to the median employee's remuneration and other details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached to this Report.

31. SECRETARIAL AUDIT REPORT

Details forming part of Secretarial Audit Report in Form MR-3 is given in the Annexure and forms part of this Report for financial year 2014-15. There are no reservations, qualification, adverse remark or disclaimer contained in the Secretarial Audit Report.

32. AUDITORS' REPORT

Notes on accounts, forming part of the Audited Accounts are self-explanatory and do not call for any further comments. There are no qualifications or adverse remarks in the Auditors' Report which require any clarifications/explanations thereof.

33. INDUSTRIAL RELATIONS

Industrial relations, during the year under review continued to remain cordial and harmonious.

34. COST AUDITORS

Pursuant to Section 148 of the Companies Act, 2013, read with the Companies (Cost Records & Audit) Amendment Rules, 2014, the cost records maintained by the Company in respect of its products are required to be audited. Your Directors, on the recommendation of the Audit Committee, appointed M/s. N. D. Birla & Co., Cost Accountants, as Cost Auditors of the Company to conduct the Audit of the Cost Accounts in respect of manufacturing of Textile for the Financial Year ending 31st March, 2015 on a remuneration fixed by the Board and has recommended their remuneration to the Shareholders for their ratification, in the forthcoming Annual General Meeting. Accordingly, a resolution seeking Members' ratification for payment of remuneration to M/s N. D. Birla & Co., Cost Accountants, is included in the Notice convening the Annual General Meeting.

The Company has e-filed the Cost Audit Report for the financial year ended 31st March, 2014 vide SRN. S31325384 on 23rd September, 2014, with Ministry of Corporate Affairs (Cost Audit Branch), New Delhi.

35. DEPOSITORY SYSTEMS

As the Members are aware that the Company's Shares are compulsory traded in dematerialized form. The Company has arrangements with both the Depositories National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), to establish electronic connectivity of its Shares, for trading in dematerialised form.

As on 31st March, 2015, 98.38% of the Company's total paid up Capital representing 32,497,249 Equity Shares are in dematerialized form.

In view of the numerous advantages offered by the Depository System, Members holding Shares in Physical mode are advised to avail of the facility of dematerialization from either of the depositories.

36. PARTICULARS OF EMPLOYEES

During the year under report, none of the employees of the Company was in receipt of remuneration for any part of the year, in excess of the amount of remuneration prescribed under Section 197 of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended upto date.

The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration) Rules, 2014 is Annexed and forms a part of this Report.

37. EXTRACT OF ANNUAL RETURN

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, in From No. MGT-9 are attached and forms part of this Report.

38. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is primarily engaged in the business of manufacturing of Cotton Yarn, Denim Fabrics, Shirtings and Garments.

Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, required to be disclosed pursuant to Section 134(3)(m) of the Companies Act, 2013, read with rule 8(3) of the Companies (Accounts) Rules, 2014, as amended is given in the Annexure and forms part of this Report.

39. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

Risk Management includes identifying types of risks and its assessment, risk handling, monitoring and reporting. The Company has adopted the measures concerning the development and implementation of a Risk Management Policy after identifying the elements of risks which in the opinion of the Board may threaten the very existence of the Company itself.

The Company has framed a policy and process to help identify, assess and manage risks, pursuant to section 134(3)(n) of the Companies Act, 2013 and clause 49(VI) of the listing agreement. The policy and process has been in place throughout the reporting period.

40. CAUTIONARY STATEMENT

Statements in the Board's Report and the Management Discussion & Analysis describing Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Many factors may affect the actual results, which could be different from what the Directors' envisage in terms of future performance and outlook.

41. ACKNOWLEDGEMENT

Your Directors thanks all the valued Customers, Suppliers, Shareholders, Business Associates, Financial Institutions, Bankers, Government Agencies and other Stakeholders, for their patronage and support and look forward to their continued support in future. They also thank the dedicated and committed team of employees of the Company for their contribution to the Company.

On behalf of the Board

(S. K. SOMANY)

Chairman

Place : Ahmedabad

Date : 30th May, 2015