Directors Report of S Kumars Nationwide Ltd.

Mar 31, 2012

The Directors have pleasure in presenting the Twenty Second Annual Report and Audited Statement of Accounts for the year ended 31st March, 2012. Your Company has achieved yet another year of satisfactory performance in turnover and profitability.

FINANCIAL HIGHLIGHTS

(Rs.in Lacs)

2011-12 2010-11 2011-12 2010-11 Particulars Consolidated Consolidated Standalone Standalone

1 Revenue from Operations (Net) 6,35,462 5,18,082 3,51,083 2,75,762

2 Other Income 967 4,206 201 355

3 Profit From Operations (PBIDT) 1,34,701 1,06,578 77,501 59,350

Less: Finance Costs 53,331 38,458 40,356 31,891 Depreciation and Amortisation expenses 14,777 12,468 9,222 7,400

4 Profit Before Tax 66,593 55,652 27,923 20,059

5 Provision For Taxation 19,508 16,403 9,966 2,789

6 Profit After Tax 47,085 39,249 17,957 17,270 Less: Minority Interest * 7,591 6,155 - -

7 Amount Available For Appropriation 39,494 33,094 17,957 17,270

8 Balance b/f from Previous Year 57,401 29,204 17,421 5,048 Appropriations:

9 Transfer to Debenture Redemption Reserve 203 950 203 950

10 Balance in Restructured Financial Cost written Off 16,288 - 14,310 -

11 Provision for Preference Dividend 32 535 32 535

12 Tax on Preference Dividend 5 89 5 89

13 Proposed Equity Dividend 2,974 2,850 2,974 2,850

14 Tax on proposed Equity Dividend 494 473 494 473

15 Surplus / (Deficit) carried to Balance Sheet 76,899 57,401 17,360 17,421

*The minority interest pertains to investment in Company's subsidiaries, namely Reid & Taylor (India) Ltd. upto 25.61%, HMX Corporation upto 5% and SKNL (UK) Ltd. upto 20% and Marling & Evans Ltd. UK upto 35%.

DIVIDEND

Your Directors are pleased to recommend a dividend on equity shares of Rs.1 for every share of Rs.10 i.e. @ 10% aggregating payout of Rs.2,974.03 lacs excluding Dividend Tax, which will be paid after obtaining approval of members in general meeting and other necessary permissions. The Directors are also recommending the payment of dividend on preference shares which will be aggregating Rs.31.65 lacs excluding Dividend Tax.

YEAR IN RETROSPECT

The financial highlights reflect a continued and steady growth for your Company at all levels. Your Company's performance is to be viewed against the background of a slowdown in the world economy and a hesitantly progressing economy on the Indian front. Your Company has achieved and demonstrated its ability to deliver substantial performance through variable and challenging environments which reflects upon the strength and diversity of its business model. Your Company has been able to develop its reputation and image across a number of products and brands in the domestic and international markets. Operating in various product categories and in multiple markets ensures the Company's consistent growth.

Your Company manufactures worsted and viscose blended suitings, yarn dyed shirtings, workwear fabric, home textiles and ready- to-wear garments. The Company has achieved consistent revenue growth with satisfactory profit margins - consolidated Sales rose by 22.7% over the previous year and Consolidated Net Profit after Minority interest recorded a 19.3% growth. This is despite not so favourable market conditions and a sluggish economic climate. This is essentially because your Company is present in all product categories - Fabrics, Apparels, Home Textiles, and has brands catering to different socio-economic segments. Your Company is a customer-led, design-centric player with focused brands for each market segment and having manufacturing units in India, Italy, UK, USA and Canada. Your Company's strength is derived from diversity in products and markets. Furthermore, your Company historically has a multi-format distribution network.

Because of the extension of fabrics brands into garments and launch of new garment brands, the share of Ready-to-Wear in total revenues is gradually increasing. In the Home Textiles market, however, the growth is stunted. The Baruche Shirt division continued to perform better. Luxury Textiles also grew smartly. On the international front, the progress of Leggiuno in Italy and HMX in USA has improved inspite of the sluggish economies in Europe and USA.

In the overall scheme of things, the Sales contribution of SKNL (Standalone) was 55%, RTIL 24% and International Business 21% while proportion of EBIDTA was 57%, 38% and 5% respectively.

The performance of Belmonte Uniformity Division was at par compared to the previous year. The sharp rise in input costs was offset by an increase in selling price. Your Company was able to maintain its market share.

Belmonte Ready-to-Wear is now well-positioned in the fashion business. It delivers high quality products at a reasonable price and in line with changing trends. With more and more top-of-the-line international brands entering the Indian market, the competition in the branded apparel industry continues to be getting sharper by the day. However, our in-house teams of designers track national and international trends to create innovative fashionable products that customers would relate and we are able to capitalize on the rebound in customer confidence.

The TWS factory in Bangalore is making shirts and trousers largely for domestic market. The Suit factory which is relatively new has focused and developed customers in the domestic market with the brands and also institutional orders.

In the Luxury Textiles division, in order to neutralize the steep increase in wool prices, selling prices were suitably increased. New and innovative products were developed and introduced such as Showcase suiting fabric, pure wool suiting with Jacquard designs, designing with Laser engraving, etc.

The International Business segment includes HMX of USA, Leggiuno of Italy and DKNY related operations in the U.K. International acquisitions facilitate transfer of technical know-how for high value shirting and garmenting.

EXPORTS

The ongoing volatility on the Europe front and lack of economic spark in the American market has caused greater pressure on the country's exports. This has affected India's foreign trade in the past year.

The slowdown has also been more obvious in the emerging and developing economies. The overall consumption of textile fabric and apparel in the world markets reportedly went down. Though, your Company is predominantly a domestic player, it was able to almost maintain its exports at Rs.66.92 crores as against Rs.68.50 crores in the previous year. Additionally, exports from the Company's subsidiary Reid & Taylor (India) Ltd. reached Rs.37.47 crores (previous year Rs.42.47crores). New markets in Africa, South America and Japan are being explored so that we can establish our presence with our premium brand image and quality products.

CURRENT BUSINESS OUTLOOK AND PLANS

'Belmonte' in the Consumer Textiles segment and 'Reid & Taylor' in the Luxury Textiles segment remain key contributors to the overall performance of the Company.

Going forward, the management is confident about your Company's continued progress. Strong synergies between domestic and international business through 'back-end front-end' model, enhanced distribution network, a comprehensive portfolio of 45 brands addressing all demographic segments, vertically and laterally integrated business, seamless supply chain and presence across the value chain have provided for a strong foundation to step up growth over the coming years.

We anticipate healthy demand for the textiles and apparel industry in India driven by growth in organized retailing, increasing consumerism, expanding middle class and heightened brand consciousness among the youth. We plan to expand the retail network through exclusive brand outlets largely in the tier 1 & 2 cities. Your Company will also increase presence of its products in Large Format Stores in the current financial year.

Your Company is engaged in capacity expansion to keep up with the increasing demand for its products. Expansion of weaving and finishing capacity is under implementation and suit factory has been set up and part production has commenced. This will help cater to the increasing demand in the Ready-to-Wear segment.

Luxury Cotton division is growing at a rapid pace re'istering noticeable growth in revenues and profitability with improved assets utilization and productivity levels. Additionally, the World Player' brand which addresses the economy segment, witnessed strong traction. We anticipate significant volumes from the brand as the market penetration and operational efficiencies improve. Plans for the nationwide unveiling of Kruger, a premium casual brand, have been progressing well with the launch expected soon.

Raw material prices are expected to be stable although at higher levels. The outlook for the current year looks bright as more Corporates as well as Government institutions are looking for reliable and good brands for their consumption. We are poised very favourably in the garment and apparel space given the depth and diversity of our operations.

Reid & Taylor (India) Ltd. (RTIL) Initial Public Offering (IPO):

Members are aware that the Company's subsidiary Reid & Taylor (India) Ltd. had completed all the required formalities to make an Initial Public Offering of issue size Rs.1000 crores, of which Rs.500 crores was primary issue for funding growth and Rs.500 crores was secondary issue being offer for sale of equity shares by existing shareholders. However, because of the sluggish market conditions throughout the past months and an uncertain IPO climate, RTIL management has decided to defer its IPO for the time being.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company is committed to support CSR initiatives and contribute towards the welfare and social upliftment of the community. In the year under review, your Company donated sums upto Rs.40,25,000 towards educational activities of youth and tribals. Furthermore, your Companys' subsidiary Anjaneya Foundation, which is set up in order to promote and support charitable activities, donated a sum of Rs.32,75,000/- towards educational and medical assistance.

SHARE CAPITAL

The equity share capital of the Company as at 31st March, 2012 has gone up by ^12,42,50,000/- from the previous year-end. This is as a result of allotment of 1,24,25,000 equity shares ofRs. 10/- each to Sansar Exim Private Limited, a promoter group Company on 13th December, 2011 on conversion of 1,24,25,000 Equity Share Warrants into equivalent numbers of equity shares of Rs. 10/- each at a premium ofRs. 54.53 per share. The said Equity Share Warrants were issued pursuant to the Special Resolution passed by the shareholders through Postal Ballot Notice dated 19th April, 2010 and Postal Ballot result declared on 31st May, 2010.

EMPLOYEES STOCK OPTION SCHEME (ESOP)

As at 31st March, 2012 there were 9,11,820 nos. of options in force to the senior employees at a price ofRs. 89.60 per option.

No options were exercised during the year under report.

The Company cancelled / withdrew 5,75,080 ESOPs granted under Employees Stock Option Scheme to the ex-employees of the Company who did not subscribe shares under ESOP Scheme.

HUMAN RESOURCE

Your Company recognizes that employees play a key role in making our business successful and we achieve that through empowering our employees. Your Company maintained an environment dedicated to maintaining high employees' sense of pride, morale and teamwork. The Human Resource Development activities focused on multi-skills training and performance management workshops. The functioning and activities were further aligned to Company's business objectives. The ongoing thrust on rationalization of manpower with focus on proper utilization continued with implementation of Zero-base manpower budget.

CORPORATE GOVERNANCE

To comply with the conditions of Corporate Governance, pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a separate section on Management Discussion and Analysis and Corporate Governance together with a certificate from the Company's Auditors confirming compliance is included in the Annual Report.

INFORMATION TECHNOLOGY

Your Company is in the process of Enterprise Resource Planning (ERP) implementation. Keeping in mind our business requirements, Management evaluated and decided to implement combination of two ERP's, i.e. NOW from Datatex for all operational areas and ORACLE FINANCIALS for financial accounting. Several modules of the above two ERP's are being implemented for the Company's Textile and Apparel business in India. In totality, the Company will have 16 implementation locations including Mysore as base location, where the connectivity through dedicated lease lines and video conference facility has been given.

DIRECTORATE

The management is sad to inform about the demise of Dr. A.C.Shah, the then Chairman of the Company, who passed away on 16th January, 2012 due to ill-health. He was Chairman of the Company from 8th July, 2005. The Board placed on record the invaluable contribution to the deliberations, advice and guidance given by late Dr. A. C. Shah during his tenure as Chairman. The Board unanimously appointed Shri Nitin S. Kasliwal, Vice Chairman and Managing Director to be the Chairman of the Board w.e.f from 13th February, 2012.

Vide letter dated 15th September, 2011, India Debt Management Private Limited appointed Shri Susheel Kak as Nominee Director vice Shri Anish Modi. The Board placed on record the guidance, advice and support given by Shri Anish Modi during his tenure as Director. We look forward to the guidance and experience of Shri Susheel Kak to help the Company in achieving its objectives.

Vide letter dated 18th April, 2012, Exim Bank appointed Shri Sujeet Bhale as Nominee Director vice Dr. Vinayshil Gautam. The Board placed on record the guidance, advice and support given by Dr. Vinayshil Gautam during his tenure as Director. We look forward to the guidance and experience of Shri Sujeet Bhale to help the Company in achieving its objectives.

In accordance with the Companies Act, 1956 and the Company's Articles of Association, Shri M. Damodaran, Shri Jitender Balakrishnan and Shri Denys Firth retire by rotation and being eligible offer themselves for re-appointment.

DIRECTOR'S RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956:

1) that in preparation of the Annual accounts the applicable Accounting Standards have been followed along with proper explanations relating to material departures, if any;

2) that such accounting policies have been selected and applied consistently, and judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the Statement of Profit and Loss of the Company for the year ended on that date;

3) that 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;

4) that the annual accounts have been prepared on a going concern basis.

DEPOSITS

Fixed Deposits received from the shareholders and the public stood at Rs. Nil as on 31st March, 2012 (Previous year Rs. Nil).

There is no deposit or interest claimed but remained unpaid. All the claimed deposits with interest have been repaid in time. Members are aware that the fixed deposit schemes have been discontinued with effect from 1st April, 2001, as benefits were not commensurate with administrative costs.

STATUTORY INFORMATION

FINANCE AND ACCOUNTS

The observations made by the Auditors in their Report and included in the relevant notes forming part of the Accounts, are self explanatory.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared by your Company in accordance with the applicable Accounting Standards (AS 21, AS 23 and AS 27) issued by the Institute of Chartered Accountants of India and the same together with Auditors Report thereon form part of the Annual Report.

SUBSIDIARY COMPANIES

The statement pursuant to Section 212 of the Companies Act, 1956 containing the details of the Company's subsidiaries is attached. Pursuant to direction under section 212(8) of the Companies Act, 1956 by Government of India, Ministry of Corporate Affairs, New Delhi vide General Circular No. - 2/2011 No. 51/12/2007-CL-III dated 8th February, 2011, the Board of Directors, by passing resolution on 30th May, 2012, gave consent for not publishing / attaching copies of the Balance Sheets, Statement of Profit & Loss, Reports of the Board and the Auditors of all the Subsidiary Companies with the audited financial statements of the Company as at 31st March, 2012.

The annual accounts of the subsidiary companies are kept for inspection by any shareholder at the registered office of the Company and shall be made available to shareholders seeking such information at any point of time.

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

Additional information required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 in respect of Conservation of Energy and Technology Absorption is given in the prescribed forms which are given in Annexure '1' to the Directors' Report.

PARTICULARS OF EMPLOYEES

Information as per Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, as per the provisions of Section 219 (1) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to all shareholders of the Company excluding the statement of particulars of employees under Section 217 (2A) of the Companies Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.

AUDITORS

The Board, on the recommendation of the Audit Committee, has proposed that M/s. Haribhakti & Co. Chartered Accountants, Mumbai, be re-appointed as the Statutory Auditors of the Company and to hold office till the conclusion of the next Annual General Meeting of the Company. M/s. Haribhakti & Co., have forwarded their certificate to the Company stating that their re-appointment, if made, will be within the limit specified in that behalf in sub-section (IB) of section 224 of the Companies Act, 1956.

In respect of observations made by the Auditors, please refer to notes to Financial Statements, note no. 27 in respect of Standalone Financial Statements and notes no. 27 to 31 in respect of Consolidated Financial Statements which are self - explanatory and hence in the opinion of the Directors, do not require any further explanation. With respect to other observations, these are receiving the management's attention and will be satisfactorily resolved.

ACKNOWLEDGEMENT

Your Directors wish to place on record the excellent support, assistance and guidance provided by the financial institutions, banks, customers, suppliers and other business associates. Thanks are also due to your Company's employees for their tireless efforts and high degree of commitment and dedication. Your Directors especially appreciate the continued understanding and confidence of the Members.

By Order of the Board For S. KUMARS NATIONWIDE LIMITED

Place : Mumbai Nitin S. Kasliwal

Date : 30th May, 2012 Chairman & Managing Director

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Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting the Twenty First Annual Report and Audited Statement of Accounts for the year ended 31st March, 2011. Your Company returned yet another year of robust performance in turnover and Profitability.

FINANCIAL HIGHLIGHTS

( Rs. in Lacs)

2010-11 2009-10 2010-11 2009-10 Particulars Consolida -ted Consolida -ted Standalone Standalone

1 Turnover 5,18,055 3,83,778 2,75,736 2,15,482

2 Other Income 4,234 2,316 382 475

3 Profit From Operations (PBIDT) 1,05,649 76,820 58,712 43,030

Less:

Interest 35,569 24,403 29,514 23,077

Depreciation 12,468 8,134 7,400 4,171

Misc. Exp.w/off 1,816 1,816 1,596 1,596

4 Profit Before Tax 55,796 42,467 20,202 14,186

5 Provision For Taxation 16,547 14,742 2,932 3,576

6 Profit After Tax 39,249 27,725 17,270 10,610

Less: Minority Interest * 6,155 4,825 - -

7 Amount Available For Appropriation 33,094 22,900 17,270 10,610

Appropriations:

8 Transfer to Capital Redemption Reserve - 5,337 - 5,337

9 Transfer to Debenture Redemption Reserve 950 225 950 225

10 Share of Minority Interest in Reserves - 442 - -

11 Provision for Preference Dividend 535 - 535 -

12 Tax on Preference Dividend 89 - 89 -

13 Proposed Equity Dividend 2,850 - 2,850 -

14 Tax on proposed Equity Dividend 473 - 473 -

15 Balance b/f from Previous Year 29,204 12,308 5,048 -

16 Surplus/(Defcit) carried to Balance Sheet 57,401 29,204 17,421 5,048

*The minority interest in 2009-10 and 2010-11 pertains to investment in Company's subsidiaries, namely Reid & Taylor (India) Ltd. upto 25.61%, HMX LLC upto 5%, SKNL (UK) Ltd. upto 20% and Marling & Evans Ltd., U.K. up to 35%.

DIVIDEND

The Directors are pleased to recommend dividend on equity shares of Rs. 1 for each share of Rs. 10 each i.e. 10% aggregating Rs. 2,849.78 lacs excluding Dividend Tax which will be paid after obtaining approval of members in general meeting and other necessary permissions. The Directors are also recommending the payment of preference dividend with arrears on the preference shares which will be aggregating Rs. 534.74 lacs excluding Dividend Tax.

YEAR IN RETROSPECT

The financial highlights reflect yet another strong performance for your Company at all levels. Your Company manufactures polyester blended suitings, worsted suitings and workwear fabric, home textiles and ready-to-wear garments. Both domestic as well as international businesses reported substantial improvement in overall performance, driven by strong volumes and higher price realization. A customer-led design-centric and distinct approach for each business division has enabled the Company to register positive growth. A comprehensive and well-diversified portfolio of brands catering to all price-categories from economy to the luxury segment has de-risked the business and yielded results.

The distinct strategic approach adopted by each of the Company's Strategic Business Units (SBUs), supported by a proficient operating model has proven effective in driving growth. A clear focus on creating a diversified brand portfolio catering to all the socio-economic segments and expanding its global footprint, with the strategic acquisition of international brands has begun to yield results for the Company. Vertically integrated operations, an expanding distribution network and successful brand positioning have driven growth during the year. A strong brand portfolio of 45 owned and licensed brands which includes international names such as Hart Schaffner Marx, Hickey Freeman, Exclusively Misook, Austin Reed, Jag Jeans, Bobby Jones and DKNY further leverages SKNL's leadership position as a branded player in the apparel business.

In particular, Belmonte and Reid & Taylor brands performed well, while Ready-to-Wear and Luxury Cotton witnessed strong volume growth. Post commencement of operations, the Baruche Super Fine Cottons (BSFC) facility is performing satisfactorily. Our economy brand World Player launched during the year has been well received and the Company is optimistic that it will deliver healthy volume as it expands its market reach and penetration.

The Company is a market leader in Uniforms with 30% market share and is the second largest player in Worsted Suitings. It is one of the largest institutional suppliers of textiles to defence and police forces in India.

The Consumer Textiles Division reported consistent growth over a period of time, mainly attributed to Belmonte which has increased its market penetration.

The growth in Luxury Textiles was on account of higher realizations from both polyester-wool and polyester-viscose fabrics. During the year, the Company expanded weaving capacities which helped improve overall operations and Profitability. The increased capacities also enabled to capture the strong demand witnessed in this segment.

The Ready-to-Wear Division comprising apparel and garments under the brands Reid & Taylor, Belmonte, Stephens Brothers and World Player has witnessed remarkable progress. Ready-to-Wear is the fastest growing segment and has reported volumes expansion in all product categories.

The Luxury Cotton Division is represented by the 12.75 million meters per annum state-of-the-art BSFC facility at Jhagadia, Gujarat. It commenced operations and gradually scaled up capacity utilization as the year ended. Going forward, as the facility reaches optimum capacity utilization, it is expected to register higher margins in line with expanding volumes.

The Total Home Expressions Division reported a growth of around 10.5%. Growth in this category has been stable, with the improving demand scenario.

Celebrity endorsements helped to strengthen the Company's diversified portfolio of well-recognised brands.

Your Company has since extended its presence overseas to the Europe and North American markets expanding its brand portfolio and catering to various price points, socio economic segments and age groups. The Company has manufacturing units located in India, Italy, UK, USA and Canada with cost-effective outsourcing.

Your management is pleased with the progress of our international subsidiaries post their acquisitions. International revenues grew remarkably by 86.6% to Rs. 1,333 Crores in FY2011. EBITDA amounted to Rs. 47 Crores as compared to Rs. 9.7 Crores for FY2010 and EBITDA margins improved by 221 bps to 3.6%. During the year, we have revamped HMX's business model by streamlining operations, following a brand-oriented approach and initiated synergies with domestic businesses. HMX boasts of an impressive line-up of brands providing for tremendous growth potential. The Company is also a leader in formal wear in North America with Coppley, Hart Schaffner Marx and Hickey Freeman. Through global acquisitions, the Company gained 37 brands across the premium and super-premium segments of the apparel market with a distribution network of large departmental and specialty stores. These acquisitions also facilitate transfer of technical know-how for high value shirting and garmenting. Our Italian subsidiary Leggiuno, has benefitted from the implementation of backward-forward integration with the BSFC facility. The joint venture with DKNY for its global menswear license has unfolded a tremendous opportunity, which is expected to drive growth through geographic expansion. Globally, there are visible signs of improvement, and recovery of retail segment in the North American markets will provide necessary stimulus to the sector. The management is confident that the overseas businesses would register improved volumes and Profitability over the years to come.

On the sectorial front, the industry witnessed an unprecedented increase in the raw material prices, which elevated margin pressure across product categories. SKNL being a branded player was successful in passing the additional cost to the consumer and maintained Profitability levels. During the year, the Company realized higher prices by about 8%-10% and bookings enhanced by 20%, thereby mitigating the risk associated with increased input prices. In the Union Budget 2011-2012, a mandatory excise duty of 10% was imposed on branded readymade garments (to be paid on 45% of the retail sales price). The Company expects to pass on this price hike to consumers as well.

EXPORTS

There is very strong demand from both domestic and overseas markets and to that extent the textile industry in India can really be a force to reckon with globally. Though your Company is predominantly a domestic player, it was able to achieve good growth in exports to Rs. 68.50 Crores (previous year Rs. 10.90 Crores.). Additionally, exports from the company's subsidiary Reid & Taylor (India) Ltd. rose to Rs. 42.47 Crores (previous year Rs. 29.07 Crores). These figures include exports of fabrics worth approx Rs. 6.85 Crores to our subsidiaries HMX (USA) and Leggiuno (Italy). Our products comprising mainly cotton fabrics, wool and wool-rich blends were exported to countries around the world including Europe, Far East, Middle East, South-East Asia, USA, South and Central America. The outlook for the current year is encouraging.

CURRENT BUSINESS OUTLOOK AND PLANS

The Indian textile industry is expected to grow significantly due to rise in income levels. Going forward, the management is confident about SKNL's prospects. Strong synergies between domestic and international business through 'back-end front-end' model, enhanced distribution network, a comprehensive portfolio of 45 brands addressing all demographic segments, vertically and laterally integrated businesses, seamless supply chain and presence across the value chain have provided for a strong foundation to deliver healthy growth over the years to come.

In March 2010, the Company launched 'Baruche' under the premium category of the Luxury Cotton segment. In April 2010, the Company launched the 'World Player' ready-to-wear brand catering to the economy segment. World Player is expected to be rolled out across an additional 560 districts and its nationwide rollout is expected to be completed over the next few quarters. World Player and Baruche brands are expected to make higher contributions in the coming month.

The Company plans to introduce a new casual premium brand for the fashionably inclined: 'Kruger' (clothing for 'out of office' wear/weekend wear) to capture market share in the segment.

The Company plans to leverage its strong brand portfolio and expand its retail network in India through exclusive brand outlets largely in the tier 1 & 2 cities. With positive consumer sentiment towards all its brands, the Company is expecting increased market penetration. We anticipate healthy demand for the textiles and apparel industry in India driven by growth in organized retailing, increasing consumerism, expanding middle class and heightened brand consciousness among the youth. SKNL is well- positioned to capitalize on these industry developments through its market leadership position. The Company has taken several strategic initiatives over the past including synergies with international subsidiaries, presence in high margin businesses, vertical integration of operations and effective brand positioning which will help it deliver an enhanced overall performance in FY2012.

Future revenue growth drivers include rollout of 160 additional exclusive brand outlets to expand its distribution network, and expansion of franchisee networks, setting up of a suits factory, and a shirts factory to improve margins by offering readymade products, scaling up capacity utilization at BSFC and capacity expansion in luxury and mid-premium textiles.

On account of the various initiatives detailed above, the Company expects

1. to capture more value from direct retailing

2. backward and forward integration in Luxury Cottons and Belmonte divisions

3. increased share of ready-to-wear in revenue composition (target 40% in coming two years)

4. scaling up the value chain in all brands.

REID & TAYLOR (INDIA) LTD. (RTIL) IPO

As approved by the shareholders of Reid & Taylor (India) Ltd. in an EOGM on 27th September 2010, the Initial Public Offering of the Company's subsidiary Reid & Taylor (India) Ltd. is being proceeded with. The Draft Red Herring Prospectus (DRHP) was fled with SEBI on December 9, 2010 and after necessary clarifications over the past months, the market regulator SEBI's approval is expected in early June. Approvals from other Statutory Authorities such as BSE, NSE and RBI have already been received. As members are aware, SKNL holds 74.39% and GIC Singapore holds 25.61% of the shares of RTIL. The issue size will be approx Rs. 1000 Crores which includes primary issue of Rs. 500 Crores (by fresh issue of equity shares) and secondary issue of Rs. 500 Crores (offer for sale of equity shares by existing shareholders). The Book Running Lead Managers (BRLMs) advise that the issue will be hitting the market some time in October, 2011. Of the total proceeds, primary proceeds will be used for the growth of Reid & Taylor business and the secondary proceeds raised by SKNL will be used for paying off SKNL debts.

RTIL has evolved into a sizable business entity and, we believe, the listing will unlock substantial value for stakeholders.

CORPORATE SOCIAL RESPONSIBILITY

Your Company is committed to support CSR initiatives and contribute towards the welfare and social upliftment of the community.

During the year your Company's subsidiary Anjaneya Foundation, which is set up in order to promote and support the activities in the felds like education in Medicine, Arts, Science, Commerce and cultural initiatives donated a sum of Rs. 22,50,000/- to an education foundation and Rs. 10,00,000/- to the Wildlife Conservation Trust for their 'Save Our Tigers' programme.

SHARE CAPITAL

The equity share capital of the Company as at 31st March 2011 has gone up by Rs. 48,46,45,390/- from the previous year-end. This is as a result of allotment of:

(1) 2,89,43,750 equity shares of Rs. 10/- each at a premium of Rs. 70/- per share to the Qualified Institutional Buyers (QIBs) on 20th September 2010 through Qualified Institutional Placement (QIP), pursuant to the special resolution passed by the shareholders through postal ballot notice dated 14th June 2010 and postal ballot result declared on 28th July 2010.

(2) 1,24,25,000 equity shares of Rs. 10/- each to N'Essence Holdings Ltd., a promoter group company on 3rd March 2011 on conversion of 1,24,25,000 nos. of Equity Share Warrants into equivalent numbers of equity shares of Rs. 10/- each at a premium of Rs. 33.15. The said Equity Share Warrants were issued pursuant to the special resolution passed by the shareholders through postal ballot notice dated 25th July 2009 and postal ballot result declared on 2nd September 2009.

(3) 70,95,789 Equity Shares of Rs. 10/- each at a premium of Rs. 47/- per Share to Daiwa Capital Markets Singapore Ltd. on 11th March 2011 on conversion of US $ 9 Million FCCBs which were subscribed in June 2006.

Pursuant to the resolution dated 19th April 2010 passed by circulation, by the Board of Directors and subsequent special resolution passed by the members / shareholders through postal ballot notice dated 19th April 2010 and postal ballot result declared on 31st May 2010, the Company has allotted 1,24,25,000 nos. of Equity Share Warrants on 15th June 2010 at a price of Rs. 64.53 each to M/s Sansar Exim Private Limited, a promoter group company on a preferential basis and received Rs. 32,54,46,313/- towards the Warrants. The warrant holders can exercise their options to convert warrants into equity shares on or before 14th December 2011.

During the year 2010-11, the company has redeemed and extinguished 14,55,000 nos. of 6% Preference Shares of Rs. 100/- each issued to the lending institutions, on account of CDR exit payment. Further, the Company has also redeemed and extinguished 9,49,838 nos. of 0.01% Preference Shares of Rs. 100/- each issued to the lending institutions.

EMPLOYEES STOCK OPTION SCHEME

As at 31st March 2011, there were 14,86,900 nos. of options in force to the senior employees at a price of Rs. 89.60 per option. No options were exercised during the year under report.

The Company cancelled / withdrew 2,97,300 Nos. of ESOPs granted under Employees Stock Option Scheme to the ex-employees of the Company who did not subscribe shares under ESOP Scheme.

HUMAN RESOURCES

At SKNL, people are central to our continuous strive for excellent performance. Your Company has implemented a comprehensive HR Strategy to attract, retain and develop talent. A major step was taken to strengthen the Learning & Development Initiative across the company. The Performance Management System was further strengthened through customized training and robust implementation thereof. In the Compensation Management Area, several new improvements were brought in, to link it closely with the Individual Performance. The Performance Linked Variable Pay Scheme for the Senior Management Staff was completely stabilized during the year and it has now become part of the Management Process. The Functional Training for the Front Line Employees was further strengthened.

Your Company has launched a specific initiative to develop Leadership Talent in the Company. The Leadership Competencies were identified and individual assessments are being carried out.

During the year the employee – employer relationship was very conducive and there was no work disruption.

CORPORATE GOVERNANCE

To comply with the conditions of Corporate Governance, pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a separate section on Management Discussion and Analysis and Corporate Governance together with a certificate from the Company's Auditors confrming compliance is included in the Annual Report.

INFORMATION TECHNOLOGY

Enterprise Resource Planning (ERP) implementation was started in the organization, across all business divisions, to bring in homogeneity & transparency in operations, better planning & managing in the supply chain and to provide real-time information to the management to make correct business decisions. As the organization is multi-locational and multi-divisional, there are many challenges in ERP implementation, which are being met and resolved and it is expected to be fully operational by the 4th quarter of this Financial Year 2011-12. This will be supported by state-of-the-art Servers, Video Conferencing facility and high-speed data transfer connection between all business divisions apart from user training to all employees to use the ERP to full extent.

DIRECTORATE

In accordance with the Companies Act, 1956 and the Company's Articles of Association, Dr A. C. Shah, Mr. Vijay Kalantri and Mr. Dara D. Avari retire by rotation and being eligible offer themselves for re-appointment.

Vide letter dated 20th September, 2010, IDBI Bank appointed Smt. Amita Narain as Nominee Director vice Mr. Keshav Prasad Rau. The Board placed on record the guidance, advice and support given by Mr. Keshav Prasad Rau during his tenure as Director. We look forward to the guidance and experience of Smt. Amita Narain to help the Company in achieving its objectives.

The Company appointed Mr. M. Damodaran as an Additional Director w.e.f 28th March 2011 on the Board of the Company. Mr. M. Damodaran is a retired IAS Officer from Manipur-Tripura cadre. He was the Chairman of the Securities and Exchange Board of India (SEBI) and Industrial Development Bank of India (IDBI). He was also Chairman of India's largest mutual fund, 'Unit Trust of India'. He was Joint Secretary (Banking Division), Ministry of Finance for five years.

Mr. Suresh N. Talwar joined the Board of the Company as an Additional Director w.e.f. 1st April 2011. Mr. Suresh Talwar is a Solicitor and a Senior Partner of M/s Talwar, Thakore & Associates, Mumbai. Before setting up this firm in April 2007, he was a Senior Partner of M/s. Crawford Bayley & Company, a leading Solicitors firm in India.

The Company is very fortunate to have on board Mr. Damodaran and Mr. Talwar as Directors and will surely be benefited from their extensive experience, keen insight and business acumen.

Mr. M. Damodaran and Mr. Suresh N. Talwar being eligible offer themselves for re-appointment as Directors of the Company in the Annual General Meeting.

Because of his prolonged ill-health, Col S. K. Raje resigned from the Board as Director on 30th July 2010. Col. Raje's services and contribution during his tenure were duly appreciated by the Board. The management is sad to inform that Col. Raje subsequently passed away on 12th February 2011.

DIRECTOR'S RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956:

1) that in preparation of the Annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

2) that such accounting policies have been selected and applied consistently, and judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the Profit and loss account of the Company for the year ended on that date;

3) that 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;

4) that the annual accounts have been prepared on a going concern basis.

DEPOSITS

Fixed deposits received from the shareholders and the Public stood at Rs. Nil as on 31st March 2011 (previous year Rs. Nil). Further unclaimed deposits and interest amounting to Rs. 1,39,608/- from 11 depositors were duly transferred to the Investor Education & Protection Fund u/s 205 (C) during the year.

There is no deposit or interest claimed but remained unpaid. All the claimed deposits with interest have been repaid in time. Members are aware that the fixed deposit schemes have since been discontinued with effect from 1st April 2001, as benefits were not commensurate with administrative costs.

SHIFTING OF REGISTERED OFFICE OF THE COMPANY

The Registered Office of the Company have been shifted from 'Avadh', Shree Ram Mills Premised, G.K. Marg, Worli, Mumbai 400 018 to B2, 5th Floor, Marathon NextGen, Off G.K. Marg, Lower Parel (West), Mumbai 400 013 with effect from 29th October, 2010.

STATUTORY INFORMATION

FINANCE AND ACCOUNTS

The observations made by the Auditors in their report and included in the relevant notes forming part of the Accounts, are self explanatory.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared by your Company in accordance with the applicable Accounting Standards (AS 21, AS 23 and AS 27) issued by the Institute of Chartered Accountants of India and the same together with Auditors Report thereon form part of the Annual Report.

SUBSIDIARY COMPANIES

The statement pursuant to Section 212 of the Companies Act, 1956 containing the details of the Company's subsidiaries is attached. Pursuant to direction under section 212(8) of the Companies Act, 1956 by Government of India, Ministry of Corporate Affairs, New Delhi vide General Circular N – 2/2011 Notification no. 5/12/2007-CL-III dated 8th February 2011, the Board of Directors by passing resolution on 30th May 2011 gave consent for not publishing / attaching copies of the Balance Sheets, Profit & Loss Accounts, Reports of the Board and the Auditors of all the Subsidiary Companies with the audited financial statements of the Company as at 31st March 2011. The annual accounts of the subsidiary companies are kept for inspection by any shareholder in the registered office of the Company and shall be made available to shareholders seeking such information at any point of time.

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

Additional information required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 in respect of Conservation of Energy and Technology Absorption is given in the prescribed forms which are given in Annexure '1' to the Directors' Report.

PARTICULARS OF EMPLOYEES

Information as per Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, as per the provisions of Section 219 (1) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to all shareholders of the Company excluding the statement of particulars of employees under Section 217 (2A) of the Companies Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.

GROUP FOR INTERSE TRANSFER OF SHARES

As required under Regulation 3(1)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, persons forming part of "Group" (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provision of Regulation 10 to 12 of the aforesaid Regulations, are given in the Annexure '2' attached herewith and which forms part of this Annual Report.

AUDITORS

The Board, on the recommendation of the Audit Committee, has proposed that M/s. Haribhakti & Co. Chartered Accountants, Mumbai, be re-appointed as the Statutory Auditors of the Company and to hold office till the conclusion of the next Annual General Meeting of the Company. M/s. Haribhakti & Co., have forwarded their certificate to the Company, stating that their re-appointment, if made, will be within the limit specified in that behalf in sub-section (1B) of Section 224 of the Companies Act, 1956.

In respect of observations made by the auditors, please refer to schedule 'P-II' note no. 3(b) which is self-explanatory and hence in the opinion of the Directors, does not require any further explanation.

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their gratitude for the assistance, guidance and support provided by the financial institutions and banks, customers, suppliers and other business associates. Thanks are also due to your Company's employees for their high degree of commitment and dedication displayed at all levels. Your Directors especially appreciate the continued understanding and confidence of the Members.

By Order of the Board

For S. KuMARS NATIONWIDE LIMITED

Place: Mumbai Dr. A. C. SHAH

Date: 30th May, 2011 Chairman

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Mar 31, 2010

The Directors have pleasure in presenting the Twentieth Annual Report and Audited Statement of Accounts for the year ended 31st March, 2010. Your company returned yet another year of positive performance in turnover and profitability.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

2009-10 2008-09 2009-10 2008-09

Particulars Consolidated Consoli dated Stand Alone Stand Alone

1 Turnover 3,84,051 2,26,036 2,15,482 1,55,023

2 Other Income 2,043 1,585 475 338

3 Profit From Ope rations (PBIDT) 77,340 48,808 43,550 25,796 Less: Interest 24,923 13,881 23,597 13,461

Depreciation 8,134 4,421 4,171 2,654

Misc. Exp.w/off 1,816 1,371 1,596 1,262

4 Profit Before Tax 42,467 29,135 14,186 8,419

5 Provision For Taxation 14,742 15,340 3,576 8,190

6 Profit After Tax 27,725 13,795 10,610 229

7 Exceptional Income on settlement of

CDR debts - 5,720 - 5,780

Less: Minority Interest* - 4,825 - 1,856

8 Amount Available For Appropriation 22,900 17,659 10,610 6,009

9 Appropriations:

Transfer to Capital Red emption Reserve 5,337 4,004 5,337 4,004

10 Transfer to Debenture Redemption Reserve 225 - 225 -

11 Share of Minority Interest in Reserves 442 2,088 - -

12 Balance b/ffrom Prev ious Year 12,308 741 - (2,005)

13 Surplus/(Deficit) carr ied to Balance Sheet 29,204 12,308 5,048 -

* The minority interest in 2009-10 pertains to investments in companys subsidiaries, namely Reid & Taylor (India) Ltd. upto 25.61%, HMX Corporation upto 5% and SKNL (UK) Ltd. upto 20%.

In 2008-09 the minority interest pertains to investment upto 23.03% in Reid & Taylor (India) Ltd. only.

DIVIDEND

With a view to conserve resources, your Directors are unable to recommend payment of dividend on equity share capital and preference share capital for the year ended 31st March, 2010.

YEAR IN RETROSPECT

The financial highlights reflect an encouraging performance for your company at all levels. Your company manufactures polyester blended suitings, worsted suitings and workwear fabric, home textiles and ready-to-wear garments. It has since entered into the overseas market through strategic international acquisitions. Your companys focus to cater to all socio economic segments alongwith capabilities of creating diversified brand portfolio has made it possible for it to achieve such buoyant results.

When the year 2009-10 began, the Indian economy was in a recession amidst the global slowdown that was still prevailing. Since then there has been a perceptible improvement in the outlook for the world economy. The Indian economy fared better than most developed economies, although its growth was a bit muted. The performance of the industrial sector has markedly improved. The country is now exhibiting signs of resurgence. The overall economic outlook is generally favourable, though mixed, with some concern of an escalating inflationary pressure.

All our established Strategic Business Units (SBUs) performed healthily, specifically Consumer Textiles, Luxury Textiles and Ready-to-wear Garments. Our HVFC (High Value Fine Cotton fabrics) facility which went on stream during the year will gradually achieve capacity build-up during the year and also strengthen the backend - frontend synergy with our Italian acquisition-Leggiuno.

The Consumer Textiles division and Ready-to-wear Garments division were driven by our mid-premium brand Belmonte which is increasingly gaining consumer endorsement and the share of this brand in the consumer textiles segment is rising.

In Consumer Textiles, SKNL operates the S.Kumars brand to cater to the economy segment and Belmonte and Uniformity by Belmonte to cater to the mid-price segment. This business is characterized by high volumes and has been achieving enhancement in margins. SKNL continues to garner a dominant 35% market share of the organized sector in the uniforms and workwear fabrics. Premium Uniforms under the Uniformity brand have become the choice of fabric in supplies to Defence and to industries requiring special purpose fabrics. To supplement the existing capacity of 15.2 m meters at Dewas, your company relies on outsourcing a major portion of its fabrics sales from domestic manufacturers. The outsourcing is limited to low-end fabrics which meet the required quality standards. Your company has undertaken expansion of its spinning, weaving and processing capacity for poly-viscose fabrics at its Dewas and Jhagadia units. This will provide improved logistical support and enable better customer servicing.

Luxury textiles SBU comprises of Reid & Taylor brand which consists of worsted, all wool, polywool and other blended fabrics. This SBU operates with a manufacturing capacity of 9.0 m meters at its Mysore plant. Over a span of just 12 years, Reid & Taylor brand has emerged as the No.2 player in the worsted fabric industry with a domestic market share of around 22%. In January 2008, SKNL subsidiarised the Luxury Textiles SBU into a separate company Reid & Taylor (India) Ltd. (RTIL) to increase its focus on the business. This brand continued to perform extremely well in the premium market.

Considering the huge potential in the Home Textiles market, your company launched its own brand Carmichael House in 2006 to cater to the premium-priced segment. The company mainly relies on outsourcing / contract manufacturing its home textiles requirement from domestic manufacturers. The new plant at Jhagadia will add finishing capacity upto 28m meters during the year.

The company ventured into the Ready-to-Wear segment by introducing the concept of Total Wardrobe Solutions (TWS). TWS caters to economy, mid-priced, premium and super-premium segments with brands like Belmonte, Reid & Taylor and Stephens Brothers.

To establish a beachhead in the EU and US markets, your company acquired Leggiuno S.p.A. and HMX Inc. These acquisitions would offer front end synergy for the companys recently commissioned HVFC facility and RTILs Mysore unit respectively. As a result, SKNL has emerged as a much larger and stronger player in the textiles industry, with a global presence.

Your company recently announced about the SKNL - DKNY licence and relationship for menswear. The joint venture agreement and strategic licensing arrangement is between Donna Karan International (20%) and SKNLs wholly owned U.K. subsidiary SKNL (UK) Ltd. (80%). DKNY is one of the most recognized brands in the global apparel market place. This JV is consistent with SKNLs focus on aligning with the worlds top apparel and accessories brand as part of the ongoing execution of its global growth strategy. SKNL (UK) Ltd. will source, design, produce and distribute a full range of DKNY menswear apparel.

Exports

In the international market, 2009-10 has been one of the most difficult years. Severe depression which started from the North American market affected most of the countries. Though your company is predominately a domestic player, we were able to achieve growth in exports on account of wider penetration into different markets and by introducing new qualities in Wool and Wool-rich blends, spreading business in the new areas and with an aggressive selling strategy. The companys subsidiary Reid & Taylor (India) Ltd. notched up exports of Rs.29.07 crores. against Rs. 19.80 Crores last year. The rest of the divisions had exports of Rs. 10.90 Crores. (Rs.88.37 lac previous year).

Markets have started stabilizing from the last quarter of 2009-10 resulting in larger volume of orders. Export business in 2010-11 would be much higher. Also, orders from group company - HMX - are flowing in regularly which would contribute substantially to export volume.

CURRENT BUSINESS OUTLOOK AND PLANS

Our domestic operating performance has significantly improved from the last year. Our international line of business is building a robust platform to expand our reach in the global market. We expect future business growth to be driven largely by volumes, across the various strategic business units of the company. SKNL has become a true multinational by making substantial investment overseas. The present phase is of consolidation so as to realize the fruits of our expertise and investment abroad.

Plans are afoot to launch new brands, either owned or through licensing arrangements, targeting different consumer segments. Towards this, the company has been actively pursuing a brand building strategy for developing a strong brand equity and recall. In the ready-to-wear segment, two new brands, one in casual premium and another in economy (World Player) are planned to be launched. Casual premium will be an out-of-office designer wear targeting the youth of the country, while World Player is aimed for the masses.

Your company is pleased to inform that commercial production at the High Value Fine Cotton plant at Jhagadia (Gujarat) has since commenced with annual capacity of 12.75m meters. Optimum utilization levels will be achieved from the fourth quarter of the year onwards. This division has been renamed as Baruche Superfine Cottons (BSFC). The global market size of HVFC fabric is expected at 550-600m meters annually, characterized with absence of any significant competition. Also, bulk of the manufacturing capacity is located in high cost manufacturing countries in the EU. This presents your company with a low-cost manufacturing base to capitalize on the attractive business opportunities. Although a few Indian manufacturers meet the quality norms, they have been unable to penetrate the market as they lack a proper distribution channel. Your companys acquisition of Leggiuno will help to establish itself in the European market and cater to leading fashion houses and brands earning much better realizations.

Your company is now the proud new owner of HMX entity, one of Americas leading clothing companies catering to the luxury and premium end of the American market. Established in 1872, HMX is the largest manufacturer and marketer of mens suits and coats in the United States. It markets business, casual and golf apparel under its 34 owned and licensed brands. The leading brands are - Hart Schaffner Marx, Hickey Freeman, Misook, Coppley, Austin Reed, Claiborne and Pierre Cardin etc. HMXs broad range of distribution channels includes fine speciality and leading department stores, value-oriented retailers and direct mail catalogues. Your company is fully prepared to meet the requirements of HMX group as a dedicated supplier.

SKNL has consecutively delivered healthy performance at all times, and has stood through growth in business earnings even in the challenging environment. Given that consumer sentiment is improving, our performance going forward looks encouraging. SKNL is well poised for growth on the back of strong brand presence across various socio-economic categories in the domestic branded textile and garments industry. The companys acquisitions in the overseas markets have provided us with a growing presence in global regions. With a dominant position in the domestic branded garment and textile industry, a strengthening position in the international geographies and an improving global market, your company is confident that it will continue to deliver improved and sustainable performances.

Your company is now a billion dollar multi-national textile conglomerate. Contribution of domestic business to total revenue in FY 10 was 82%.

CORPORATE SOCIAL RESPONSIBILITY

During the year, your companys subsidiary Anjaneya Foundation, which is set up in order to promote and support the activities in the fields like education in Medicine, Arts, Science, Commerce and cultural initiatives covering the deserving and needy people in India and other related activities, made donations of Rs. 5,49,000/- towards such objectives.

SHARE CAPITAL

The paid up equity share capital of the company as at 31st March 2010 has gone up by Rs. 13,12,24,000 from the previous year-end as a result of allotment of 1,31,22,400 nos. of equity shares of Rs. 10/- each to promoter group company, Anjani Finvest Private Ltd. on 1st April 2009 on conversion of 1,31,22,400 nos. of Fully Convertible Debentures (FCDs) into equivalent numbers of equity shares at a premium of Rs.72.50. The said FCDs were issued pursuant to the Special Resolution passed in the Extra Ordinary General Meeting of the company held on 26th March 2007. As per the terms of issue, the FCDs were to be converted on or before 2nd April 2009.

Pursuant to the Board resolution dated 25th July 2009 and subsequent special resolution passed by the members / shareholders through postal ballot notice dated 25th July 2009 and postal ballot result declared on 2nd September 2009, the company has allotted 1,24,25,000 nos. of Equity Share Warrants on 31st October, 2009, at a price of Rs.43.15 each to NEssence Holdings Ltd., a promoter group company on preferential basis and received Rs. 13,40,34,687 as 25% subscription money towards the Warrants.

During the year 2009-10, the company has redeemed and extinguished 1,60,000 nos of 6% Preference Shares of Rs.100/- each and 8,96,079 nos. of 0.01% Preference Shares of Rs. 100/- each issued to the lending institutions, on account of CDR exit payment.

Subsequent to the Balance Sheet date, for the information of the members, on 5th April 2010, the company has also redeemed and extinguished 200,000 nos. of 6% Preference Shares of Rs.100 each and 2,25,492 nos. of 0.01% Preference Shares of Rs.100 each issued to lending institutions on account of CDR exit payment.

EMPLOYEES STOCK OPTION SCHEME

As at 31st March 2010, there were 17,84,200 nos. of options in force to the senior Employees at a price of Rs.89.60 per option. No options were exercised nor cancelled / withdrawn during the year under report.

HUMAN RESOURCES

SKNL is blessed to have the best talent in the industry both domestic and international.

The company has a very strong Professional Management Team. Each SBU is headed by a segment specialist who is having relevant domain expertise. The SBU heads are assisted by professionals who are experts in their fields.

During the year, the management undertook several steps to strengthen Human Resource management. A major step was taken to link the compensation to actual performance of individuals. A structured Key Result Area-based Performance Pay system is implemented for the Leadership team. Simultaneously, a Performance Management and Development system has been implemented for middle and junior level executives. These two initiatives will positively impact the employee morale and motivation. The brands of the company has improved significantly and as a result, it could attract a number of senior professionals with proven track record to spearhead various business initiatives. The company has also stepped up investment in training for the front-line staff.

During the year the employee-employer relationship was very conducive and there was no work disruption.

CORPORATE GOVERNANCE

To comply with the conditions of Corporate Governance, pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a separate section on Management Discussion and Analysis and Corporate Governance together with a certificate from the Companys Auditors confirming compliance is included in the Annual Report.

INFORMATION TECHNOLOGY

Measures to improve operational effectiveness in the organization are continuing. A work flow based leave management system has been implemented alongwith the swipe card system. Internet access has been further strengthened. ERP implementation is in progress.

DIRECTORATE

In accordance with the Companies Act 1956 and the companys Articles of Association, Mr. Martin Henry, Mr. Anish Modi and Mr. Denys Firth retire by rotation and being eligible offer themselves for reappointment.

Vide letter dated 23rd October 2009, Export Import Bank of India appointed Dr. Vinayshil Gautam, currently working with Indian Institute of Technology, Delhi, in the Managing Department as A AlSagar Chair Professor of Management, as a Nominee Director vice Shri R. W. Khanna. The Board placed on record the guidance, advice and support given by Shri R. W. Khanna during his tenure as Director. We look forward to the guidance and experience of Dr. Vinayshil Gautam to help the company in achieving its objectives.

DIRECTORS RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956.

1) that in the preparation of the Annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

2) that such accounting policies have been selected and applied consistently, and judgements and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March 2010 and of the profit and loss account of the company for the year ended on that date;

3) that 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;

4) that the annual accounts have been prepared on a going concern basis.

DEPOSITS

Fixed deposits received from the shareholders and the public stood at Rs. Nil as on 31st March 2010 (previous year Rs. Nil). Further unclaimed deposits and interest amounting to Rs. 127,631/- from 14 depositors were duly transferred to the Investor Education & Protection Fund u/s 205 (C) during the year.

There is no deposit or interest claimed but remained unpaid. All the claimed deposits with interest have been repaid in time. Members are aware that the fixed deposit schemes have since been discontinued with effect from 1st April 2001, as benefits were not commensurate with administrative costs.

STATUTORY INFORMATION:

FINANCE AND ACCOUNTS

The observations made by the Auditors in their report and included in the relevant notes forming part of the Accounts, are self explanatory.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared by your company in accordance with the applicable Accounting Standards (AS 21, AS 23 and AS 27) issued by the Institute of Chartered Accountants of India and the same together with Auditors Report thereon form part of the Annual Report.

SUBSIDIARY COMPANIES

The statement pursuant to Section 212 of the Companies Act, 1956 containing the details of the companys subsidiaries is attached. The company has applied on 20th May, 2010 to the Government of India, Ministry of Corporate Affairs, New Delhi u/s 212 (8) of the Companies Act, 1956 to exempt it from attaching the copies of the Balance Sheet, Profit & Loss Account, Reports of the Board and the Auditors of all the Subsidiary Companies to the Balance Sheet of the company as at 31st March 2010.

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

Additional information required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 in respect of Conservation of Energy and Technology Absorption is given in the prescribed forms which are given in Annexure 1 to the Directors Report.

PARTICULARS OF EMPLOYEES

Information as per Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended forms part of this Report. However, as per the provisions of Section 219(1) (iv) of the Companies Act, 1956 the Report and Accounts are being sent to all shareholders of the company excluding the statement of particulars of employees under Section 217 (2A) of the Companies Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the company.

GROUP FOR INTERSE TRANSFER OF SHARES

As required under Regulation 3 (l)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 persons forming part of "Group" (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969) forthe purpose of availing exemption from applicability of the provision of Regulation 10 to 12 of the aforesaid Regulations, are given in the Annexure 2 attached herewith and which forms part of this Annual Report.

AUDITORS

The Board, on the recommendation of the Audit Committee, has proposed that M/s. Haribhakti & Co. Chartered Accountants, Mumbai, be re-appointed as the Statutory Auditors of the company and to hold office till the conclusion of the next Annual General Meeting of the company. M/s. Haribhakti & Co., have forwarded their certificate to the company, stating that their re-appointment, if made, will be within the limit specified in that behalf in sub-section (IB) of section 224 of the Companies Act, 1956.

In respect of observations made by the auditors, please referto schedule P note no. 3(b) and 6 which are self-explanatory and hence in the opinion of the Directors, does not require any further explanations.

ACKNOWLEDGEMENT

Your Directors are pleased to place on record their appreciation of the continued cooperation and support provided by financial institutions, banks, government authorities, business associates and shareholders. The Board also recognizes the contribution of the esteemed customers in the growth of the company and takes this opportunity to pledge the companys commitment to serve them. The Board would also particularly like to express great appreciation of the understanding and support expressed by the employees at all levels and the shareholders.

On behalf of the Board For S. Kumars Nationwide Limited

Place: Mumbai Dr. A. C. Shah Date : 28th May 2010 CHAIRMAN