The Directors are pleased to present the 19th annual report and audited accounts of the Company for

the year ended March 31, 2009. FINANCIAL RESULTS The financial performance of your Company for the year ended March 31, 2009 is summarised below:
Particulars a) Net sales b) PBIDT c) Less : Interest d) PBDT e) Less : Depreciation f) Profit before tax g) Less: Foreign exchange gain/(loss) h) Profit/(loss)before tax after extraordinary item i) Less : Provision for tax j) Net Profit /(loss) k) Add :Profit brought forward l) Amount carried to balance sheet m) Earning per share (Rs) current year 13980.6 2605.3 833.2 1772.1 1159.3 612.8 (1440.7) (827.9) (297.5) (530.4) 2146.7 1616.3 (2.64) (Rs million) previous year 10486.7 1540.0 473.2 1066.8 863.8 203.0 278.1 481.1 81.6 399.5 1756.8 2146.7 2.06

CORPORATE OVERVIEW The Company operates in diversified business segments viz. yarn, terry towel, paper and chemical and has captive power plant to cater to needs of it's business segments. As on March 31, 2009, the Company is having following manufacturing capacities installed & operational: Textile
Yarn Yarn processing Open end yarn Terry towels 1,76,352 spindles 6,825 tpa 1,920 rotors 350 looms 11,75,000 tpa 11,00,000 tpa 110 tpd 50 MW 338 tph

Paper & Chemicals

Writing & printing paper Sulphuric acid Caustic soda

Energy
Co-generation of power Steam

RESULTS OF OPERATIONS Financial review The net sales of the Company for the year under review increased to Rs 13,980.6 million as compared to Rs 10,486.7 million in the previous financial year, registering a growth of 33.32 percent. The Operating profit for the year has increased by Rs 1,065.3 million in absolute terms,

a growth of approximately 70 percent as compared to last year and accordingly the gross profit margin has increased by approximately 4 percent. During the year under review, Company has incurred a net loss of Rs 530.4 million due to volatility in foreign exchange resulting into foreign exchange loss; and higher amount of depreciation and interest attributable to expansion projects of the Company. The Company had negative earning per share of Rs (2.64) and cash earning per share was Rs 2.80 during the current year. Total paid up capital of your Company has increased from Rs 1,941.9 million to Rs 2,221.9 million. During the year under review, your Company has allotted 2,80,00,000 equity shares pursuant to conversion of warrants issued on preferential basis. More details on issued equity shares are provided elsewhere in this annual report. Analysis of other relevant figures of balance sheet and profit and loss account is given in "management discussion and analysis report" forming part of annual report. Performance Review A detailed discussion on performance of operations of the Company is given elsewhere in this annual report under "management discussion & analysis report". DIVIDEND Keeping in view the loss incurred during the year, ongoing expansion, modernization and other future investment possibilities in order to meet competition, your directors have decided not to recommend any dividend for the year under review. CONTRIBUTION TO THE NATIONAL EXCHEQUER The Company contributed a sum of Rs 249.3 million to the exchequer by way of central excise duty in addition to other direct and indirect taxes during the year under review. EXPORTS Export sales accounted for 49 percent of net sales. During the year under review, export sales increased by 32 percent from Rs 5,192.8 million in the previous year to Rs 6,861.5 million in the current year. EXPANSIONS/MODERNISATION Directors of the Company takes pleasure in informing you that during the year under review, Company has stabilized the operations and started commercial production on newly installed state-of-the-art pulp and paper machines after completing, balancing and synchronization

activities. This integrated pulp and paper expansion project of the Company involved a capital outlay of Rs 8,250 million. The Company is further incurring a capital expenditure of Rs 400 million for de-bottlenecking of paper project as to enhance production level and quality of final products. After this expansion, your Company has emerged as World's largest agro straw based paper Company with a production capacity of 1,75,000 tpa of both printing & writing paper using wheat straw as the main raw material, which saves about 5,000 trees a day. This project has enabled you Company to penetrate into value added pape segment and your Company has launched two branded copier paper products - `Spectra' and `My Choice' during the year under review. As reported in our last year report, the Company has established its first manufacturing venture outside the State of Punjab by completing first phase of yarn expansion project consisting of 50,400 spindles installed in Budni, Madhya Pradesh. The commercial production on these spindles was started during the month of April 2009. This project entails setting up of 1,00,800 spindles at a total capital outlay of Rs 3,737 million in two phases. The Company has laid foundation stone and started civil works for the second phase consisting of another 50,400 spindles which shal be operational by third quarter of financial yea 2009-10. During the year under review, your Company also completed terry towel expansion plan by installing 82 looms. Out of this, 14 looms had already become operational during the financia year 2007-8. The Company has commenced commercial production on remaining looms during the third quarter of financial year 2008-9 This project, which involved setting of 82 looms and balancing cum modernisation of textile manufacturing facilities, was fully completed with a capital investment of Rs 2,130 million Further, the Company has undertaken anothe expansion project of its terry towel division unde which Company is upgrading its existing 18 looms and 24 new looms are being set up. This project is being implemented with a capital outlay of Rs 359.8 million and is being set up in textile park developed by Lotus Integrated Texpark Limited, a special purpose vehicle, and shall be completed by second quarter of financial year 2009-10. SUBSIDIARIES As on the last day of financial year under review Company had two foreign subsidiaries, i.e Abhishek Industries Inc, a wholly owned subsidiary situated at USA and Abhishek Europe SA, a subsidiary in Neuchatel; apart from one Indian wholly owned subsidiary Abhishek Globa Ventures Limited. However, the Company has disinvested its entire holding in Abhishek Europe SA, Neuchatel by way of transferring 1,000 equity shares on May 18, 2009 and consequent to this transfer, the Abhishek Europe SA ceased to be a Subsidiary Company of Abhishek Industries Limited and the Company does not hold any voting right/control in Abhishek Europe SA from the aforesaid date of disinvestment. The Ministry of Corporate Affairs, Government of India, vide its letter no. 47/251/2009-CL-3 dated May 8, 2009 has granted exemption to the Company from attaching balance sheet, profit & loss accounts, etc of the aforesaid subsidiary companies to the accounts of the Company for the

financial year 2008-9. The Annual accounts of the subsidiary companies alongwith the reports of the Directors and Auditors thereon and all related detailed information are open for inspection by any investor including investor of subsidiary companies at the head office of the Company and of the subsidiary companies concerned. The Company will make available these documents to investors including investors of subsidiary companies upon receipt of request from them. The investors, if they desire, may write to the Company to obtain a copy of the financials of the subsidiary companies. A statement giving information on the financials of subsidiaries for the year ended March 31, 2009 and the consolidated financial statements prepared by the Company in accordance with Accounting Standard are given in the annual report for the reference of the members. DIRECTORS During the year under review, Mr Anurag Verma ceased to be a director of the Company consequent to withdrawal of his nomination by PSIDC. Mr Karan Avtar Singh was appointed as an additional director by the Board and holds office upto the ensuing annual general meeting. Further, in accordance with the provisions of Articles of Association of the Company, all the directors, for the time being, except the Managing directors and Whole time director, shall retire annually and accordingly Mr S.K. Tuteja, Ms Pallavi Shroff, Ms Ramni Nirula and Mr Rajiv Dewan, directors are retiring at the ensuing annual general meeting. All retiring directors, offer themselves for re-appointment. As per the approval of shareholders in last annual general meeting, Mr Rajinder Gupta has been re- appointed as Managing director of the Company for a period of three years w.e.f. April 1, 2009. The Board has appointed Mr Raman Kumar as Whole time director of the Company for a period of three years w.e.f. September 24, 2008 and recommends his appointment alongwith remuneration for the approval of shareholders. FIXED DEPOSITS During the year under review, your Company has not accepted any fixed deposits and no amount of principal or interest was outstanding as of balance sheet date. NO DEFAULT The Company has not defaulted in payment of interest and/or repayment of loans to any of the financial institutions and/or banks during the year under review. CORPORATE GOVERNANCE Your Company is committed to adhere to the best practices & highest standards of corporate governance. It is always ensured that the practices being followed by the Company are in alignment with its philosophy towards corporate governance. The well-defined vision and values

of the Company drives it towards meeting business objectives while ensuring ethical conduct with all stakeholders and in all systems and processes. Your Company proactively works towards strengthening relationship with constituent of system through corporate fairness, transparency and accountability. In your Company, prime importance is given to reliable financial information, integrity, transparency, fairness, empowerment and compliance with law in letter and spirit. Your Company proactively revisits its governance principles and practices as to meet the business and regulatory needs. Detailed compliances with the provisions of Clause 49 of the Listing Agreement for the year 2008-9 has been given in corporate governance report, which is attached and forms part of this report. The Auditors' certificate on compliance with corporate governance norms is also attached thereto. HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS The human resources development function of the Company is guided by a strong set of values and policies. Your Company strives to provide the best work environment with ample opportunities to grow and explore. Your Company maintains a work environment that is free from physical, verbal and sexual harassment. The details of initiatives taken by the Company for development of human resources are given in management discussion & analysis report. The Company maintained healthy, cordial and harmonious industrial relations at all levels. RECOGNITIONS & AWARDS During the year under review, your Company has been conferred Silver Trophy for outstanding export performance for "Top Exporters - Madeups" in the Category of "Terry Towels" for the year 2007-8 by The Cotton Textiles Export Promotion Council (TEXPROCIL). AUDITORS & AUDITORS' REPORT M/s Deloitte, Haskins & Sells, Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of ensuing annual general meeting and are eligible for re-appointment. The Company has received a certificate from M/s Deloitte, Haskins & Sells, Chartered Accountants, under Section 224(1) of the Companies Act, 1956 confirming their eligibility and willingness to accept the office of the Statutory Auditors for the year 2009-10, if re-appointed. The Statutory Auditors of the Company have submitted auditors' report on the accounts of the Company for the accounting year ended March 31, 2009. In their report, they have made an observation that loss on valuation of open put derivative options could not be determined by the Company due to certain reasons as specified in Note 18 of the Notes to Accounts. The ultimate

outcome of these transactions and their effect on these accounts cannot be ascertained at this stage. As you are aware that a major part of revenue of your Company comes from export sales and as such Company has foreign currency fluctuation exposure. Your Company hedges its foreign currency fluctuation exposure by way of foreign currency derivative options. The Company has taken various foreign currency options from various banks and as at March 31, 2009, there were certain open put options outstanding having a maturity period up to January 2013. These derivative options are proprietary products of banks, which do not have a ready market and as such are marked to a model, which is usually bank specific instead of being marked to market. In the view of the significant uncertainty associated with the above derivative options whose ultimate outcome depends on future events, the loss if any, on such open derivative options cannot be determined at this stage. The other points of auditors' report are self- explanatory and needs no comments. COST AUDIT Pursuant to the provisions of Section 233B of the Companies Act, 1956 and subject to the approval of the Central Government, the Board of Directors of your Company has re-appointed M/s Ramanath Iyer & Co., Cost Accountants, New Delhi as Cost Auditor for the accounting year 2009-10 to carry out an audit of cost accounts of the Company in respect of textile, paper and chemical divisions. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is given as Annexure I hereto and forms part of this report. DISCLOSURE ON ESOP The Abhishek Employee Stock Options Plan, 2007 has been constituted in accordance with the Securities and Exchange Board of India (Employee Stock Options Scheme & Employee Stock Purchase Scheme) Guidelines, 1999. The relevant disclosure on Company's stock options scheme as per these guidelines has been provided in Annexure II hereto and forms part of this report. PARTICULARS OF THE EMPLOYEES As per the provisions of Section 217(2A) of the Companies Act, 1956, the statement of particulars of the employees, etc forms part of this report. However, as per the provisions of Section 219(1) (b)(iv) of the Companies Act, 1956, the annual report excluding the abovesaid information is being sent to all the members and other entitled persons. Any member interested

in obtaining such particulars may write to the Company Secretary at the registered office of the Company. RESPONSIBILITY STATEMENT OF DIRECTORS A Directors' Responsibility Statement, setting out the requirements pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956 is annexed as Annexure III hereto and forms part of this report. ACKNOWLEDGEMENTS It is our strong belief that caring for our business constituents has ensured our success in the past and will do so in future. Your Directors acknowledge with sincere gratitude the co-operation and assistance extended by the Central Government, Government of Punjab, Government of Madhya Pradesh, Financial Institution(s), Bank(s), Customers, Dealers, Vendors and society at large. Your Directors also wish to convey their appreciation for collective contribution & hard work of employees across all level. The Board, also, takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders and their confidence in Company's management and look forward to their continued support in future too.
For and on behalf of the Board S K Tuteja Rajinder Gupta Chairman Managing Director

Place : New Delhi Date : July 23, 2009