Directors Report of Volant Textile Mills Ltd.

Mar 31, 2010

The Directors have pleasure in presenting the Fifteenth Annual Report for the year ended 31st March, 2010.

FINANCIAL RESULTS

(Rs. in lacs)

Current Year Previous Year Gross profit/ (loss) before Interest depreciation & exceptional/

Extra ordinary items 134.41 25.16

Add: Exceptional / Extra ordinary item - 1.26

Less: Prior Period Adjustments (0.19) (1.02)

Less: Financial charges (13.86) (20.13)

Less: Depreciation (119.98) (108.53)

Less: Provision for Fringe Benefit Tax Nil (1.81)

Net Profit / (Loss) 0.38 (105.07)

DIVIDEND

In view of accumulated losses, your directors do not recommend any dividend for the year under review.

OPERATIONS

The Company had installed speed-up kits on its Suber machines in the previous year. There were teething problems in the looms where these kits were installed, but the looms are now getting stabilized. The speed-up kits are installed on about 23 nos till the year end. Full implementation would be completed in the current year. This would give about 20% higher production on the existing machines, which would increase the contribution from these machines. The benefits of these expansions will come in the forthcoming years. The Company is exploring possibilities of getting its fabrics processed outside instead of just selling grey fabrics. This should bring about a value addition of about 30% to the current production and also improve the margins.

The Company also undertook sampling for the mattress ticking industry and a market research was conducted through M/s Tech nop ak for the prospects of tapping the mattress ticking industry. The results of the market research were positive and the Company plans to develop this sector within technical textiles, in the near future.

The total production in the current year was 31,35,085 linear metres (29,79,351 linear metres). The total sale during the year was Rs. 1,534.13 lacs (Rs. 917.46 lacs). This includes export sales of Rs. 503.04 lacs (Rs. 551.05 lacs) made through merchant exporters, local sales of Rs. 991.42 lacs (Rs. 277.85 lacs), job-work charges giving a gross realization of 27.65 lacs (Rs. 64.58 lacs) and sizing charges of Rs. 12.02 lacs (Rs. 23.98 lacs).

The Company has fully paid SASF in April, 2009, and has received No Dues Certificate dated 30th May, 2009, making the Company a term debt-free Company. Satisfaction of charge was filed with ROC on 29th June, 2009.

On 24th February, 2009, your Company has been certified for ISO 9001:2008 Quality Management Systems by Germanischer Lloyd Certification Gmbh. The certification is valid till 23rd February, 2012.

REVIEW AND FUTURE PROSPECTS

The company was declared a sick industrial unit under section 3(1 )(0) of SICA, 1985, by BIFR in case no. 322/02 in March, 2006, and Bank of Baroda was appointed the Operating Agency. A scheme of Rehabilitation was prepared and submitted by the OA. The Honorable BIFR, in its hearing held on 13th April, 2010 and 9th August, 2010 has directed the Company to prepare a revised DRS based on the current balance sheet and has further directed to consider 31st March, 2010 as the cut-off date for the same. The Company is considering various options for long-term viability on a sustained basis, and revised revival scheme is under preparation.

The Company plans to get its fabrics processed in the near future, thereby giving a higher value addition of about 30% and better margins.

The Company is also looking at other avenues of increasing sales and margins in tying up with companies for regular marketing. It is also contemplating on imports of certain technical textiles. It is also tied-up for marketing technical textile fabrics with special finishes like FR, water repellant, etc. with an Indian company. The Company has also been carrying out trading operations in fibre waste products, tow and petro fibres. The Company is also analyzing various options with merger etc. for giving optimum returns to its shareholders.

Apart from the above, the company is scouting and evaluating various opportunities/ avenues for fuelling inorganic growth through potential merger and acquisition possibilities. This would enable the company to enhance operations, improve efficiencies, provide economies of scale, open up new and potential markets and thus unlock synergies to derive maximum valuation for all stakeholders.

The statements of the new Textile Minister are very positive and give direction for the growth of the industry in India. The directors are very optimistic of the textile trade and feel that with the pro- active government policies the Indian textile industry can have a dominant share in the world trade after China. We are taking a long term view of the industry and hope to increase turnover and margins from the current position.

DIRECTORS

At the ensuing Annual General Meeting, Mr. D. A Tare, Director of the Company, retires by rotation and being eligible offers himself for re-appointment. Mr. D. A Tare is a Director of the Company having vast experience in industry and administration.

Mr. S. Ramadoss was appointed by the Board of Directors as Additional Independent Director and holds office up to this Annual General Meeting. Mr. S. Ramadoss is having technical and financial

qualification with over 42 years experience in different industries and it would be in the interest of the Company to appoint him as Independent Director.

Mr. Abhay Kumar Purohit, Executive Director of the Company resigned w.e.f. 7th April, 2010 and the Board place on record appreciation for valuable services rendered by him.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to the Directors Responsibilities Statement, it is hereby confirmed:

That in the preparation of the annual accounts, the applicable accounting standards have been followed.

That the Directors have selected such accounting policies and applied them consistently 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 at the end of the financial year on 31st March 2010 and of the profit/loss of the Company for that period;

That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

That the Directors have prepared the annual accounts on a going concern basis as they are hopeful that the Company will start generating profits in the near future.

AUDITORS

M/s Yadav Pujara & Shah, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting. They have expressed their willingness to continue as Statutory Auditors for the Financial Year 2010-11 and accordingly, a resolution proposing their appointment is being submitted to the ensuing Annual General Meeting. The members are requested to consider their reappointment for the current financial year 2010-11 and authorize the Board of Directors to fix their remuneration.

AUDITORS REPORT

The Notes on accounts, referred to in the Auditors Report are self explanatory and therefore, do not call for any further comments under Section 217(3) of the Companies Act, 1956.

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

As required under Section 217(1 )(e) of the Companies Act, 1956 read with rule 2 of the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988, information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is annexed as Annexure A to Directors Report.

PUBLIC DEPOSITS

The Company has not accepted any deposit from the public within the meaning of Section 58A of the Companies Act 1956 and the Rules made thereunder.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a certificate from the Auditor of the Company regarding compliance of conditions of Corporate Governance as stipulated under clause 49 of the Listing Agreement with Stock Exchanges, form part of the Annual Report.

LISTING

The equity shares of the company are listed on the Stock Exchange at Mumbai. Trading was suspended, however company re-listed after completion of procedure for removal of suspension and trading started w.e.f 05th August, 2010. The Company had applied to get the shares delisted from Ahmedabad and Jaipur Stock Exchanges in the year 1999 in view of the nil trading there, but the delisting procedure has not been completed. The Company hopes to get their shares delisted from Ahmedabad and Jaipur Stock Exchanges as per the provisions of SEBI (Delisting of Securities Guidelines), 2003, the Listing Agreement for which a Special Resolution was passed at the 12th Annual General Meeting of the Company.

PARTICULARS OF EMPLOYEES

There are no employees covered under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (particulars of the Employees) Rules, 1975 as amended.

ACKNOWLEDGEMENTS

The Directors are pleased to place on record their sincere gratitude to financial institutions and business constituents for their continued valuable co-operation and support to the Company during the year.

Your Directors also wish to place on record their appreciation for the dedication with which the employees at all levels performed their duties and for their cooperation and support in stabilizing the production and quality and for carrying out the expansion plans of the Company.

On behalf of the Board of Directors

Rajesh Somani

Chairman & Managing Director

Place: Mumbai,

Date: August 31st, 2010