BOARD'S REPORT & MANAGEMENT DISCUSSION AND ANALYSIS

To The Members of

R & B Denims Limited

The Directors take pleasure in presenting the Sixth Annual Report together with the audited financial statements for the year ended March 31, 2016. The Management Discussion and Analysis has also been incorporated into this report.

2. HIGHLIGHTS OF PERFORMANCE

• Standalone total income for the current financial year was increased to Rs. 1,626,462.13 (in thousands) as compared to Rs. 1,566,278.36 (in thousands) in 2015, increased by 3.84%;

• Standalone net sales for the year was Rs. 1,590,024.32 (in thousands) as compared to Rs. 1,544,346.65 (in thousands) in 2015, a growth of 2.96%;

• Standalone profit before tax for the year was Rs. 21,057.89 (in thousands) as compared to Rs. 7,728.79 (in thousands) in 2015;

• Standalone Profit after tax for the year was Rs. 13,924.59 (in thousands) as compared to Rs. 3,688.19 (in thousands) in 2015.

3. STATE OF COMPANY'S AFFAIRS

Your directors are glad to report that during the year under review your company has posted higher income of Rs. 1,626,462.13 (in thousands) in the current year as compared to Rs. 1,566,278.36 (in thousands) in the corresponding previous year. Hence, your company has generated higher net profit of Rs. 13,924.59 (in thousands) in the current year as compared to net profit of Rs. 3,688.81 (in thousands) in the corresponding previous year.

4. TRANSFER TO RESERVES IN TERMS OF SECTION 134(3)(J) OF THE COMPANIES ACT, 2013

For the financial year ended on March 31, 2016, the Company has proposed to carry an amount of Rs 13,924.59 (in thousands) to Balance Sheet under the head "General Reserve Account".

5. DIVIDEND

In view of the requirement of the profits for strengthening of the company, your directors have decided to plough back the profit into the business hence no dividend could be recommended for the year under review.

6. MATERIAL CHANGES SUBSEQUENT TO THE CLOSE OF THE YEAR:

No material changes have been occurred between Balance Sheet date and the date on which the financial statement are approved by the Board of Directors.

7. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

During the year under review there has been no such significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future.

8. SUBSIDIARY COMPANY/ASSOCIATE/JOINT VENTURE:

There has been no subsidiary/Associate/Joint Venture incorporated/ceased of your company during the financial year 2015-16.

9. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

In terms of the provision of Regulation 34 of the Securities Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulation 2015, the management Discussion and Analysis is a forming part of this Annual Report.

10. CHANGE IN THE NATURE OF BUSINESS

There is no change in the nature of the business of the company during the financial year 2015-16.

11. SHARE CAPITAL

The paid up Equity Share Capital as on March 31, 2016 was Rs. 139,946.88 (in thousands). The Company has not issued/allotted any shares however the company has made offer for sale of Equity Shares during the financial year 2015-16.

12. FINANCE

Cash and cash equivalent as at March 31, 2016 was Rs. 16,528.32 (in thousands). The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

12.1 ACCEPTANCE OF DEPOSITS

The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014 and any modification thereof.

12.2 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the Notes to the financial statements provided in this Annual Report.

13. OPERATIONS

As per the latest GDP growth estimates, Indian economy grew by 7.56% in FY16 compared to 7.4% in FY15, mostly driven by improved economic fundamentals and revision of GDP methodology calculation. Particularly, performance of industry sector was excellent in the last year, and your company has maintained and stable at the same position in the current year also. The performance of your Company is highly encouraging. Your Company has closed the financial year 2015-16 with 2.96% growth in sales and PBT (excluding Exceptional items) has shown a remarkable growth of 172.46% compared to the previous year. Your Company has achieved the growth across all business segments.

14. DENIM INDUSTRY OUTLOOK AND OPPORTUNITIES

The Indian denim industry is showing continual growth trends over the years. With newer territories, technologies and trends, the market is only going to see some exciting moments  ahead. Consumers, especially the youth, in cities beyond the metros and mini metros are growing exceptionally aspirational. With increasing globalization, young India prefers denims as a part of their essential daily wear. Denim Manufacturing Association estimated that Denim manufacturing and consumption in India has grown at a compounded annual growth rate (CAGR) of up to 15% over the last decade and is expected to grow at similar levels over the next few years.

Denim is of the most promising category in India's apparel market. The global market for denim is forecast to reach USD 64.1 billion by 2020. The Indian denim industry has shown continual growth over the years and currently the country boasts of a denim manufacturing capacity of around 1.1 billion meters per annum. Its utilization levels are pegged at 80-85%. Despite the impressive statistics, the Indian denim manufacturing industry contributes 5% to the global scenario, reflecting the overall performance of the textiles industry. However, according to industry experts, denim is the only segment in the Indian textile industry that has the potential to grow manifold.

The value share of denim market is skewed in favour of mega metros and metros which account for almost half of the total denim market at a share of 49 percent. Though the markets of other urban areas and rural India contribute high in volume terms, their combined share in market value is only 51 percent.

As the penetration of denim category and the awareness of denim quality increases in those cities and rural India, their share in market value will start increasing with more number of consumers willing to pay premium for the quality, design and fit.

In fact, India has been ranked as a top destination for retail investments among 30 global emerging markets. However, despite the Indian denim manufacturing industry witnessing rapid growth in the last 4-5 years.

Denim fabric production in India is concentrated in the western and a northern part of the country with more than 45 percent contribution coming from Gujarat is the production hub.

The Indian denim industry stands to benefit immensely from the ambitious "Make in India" initiative. The vision of the programme has the potential to overhaul the segment's perception and the country's contribution in the world denim scenario. However, to turn this vision in to reality, India's denim manufacturing segment needs to be equipped with facilitating mechanisms. Even more important is the effective implementation of these mechanisms. Once this is done, the strength of domestic Indian denim markets as well as its denim export capabilities will remain unparalleled.

15. COSTS-DENIM BUSINESS

During the year 2016, the economy witnessed an upward movement in the overall cost structure and the Company continued to focus on cost improvements through its excellent programs.

15.1 Cost of materials consumed

Cost of materials consumed accounted for 78.75% of total income from operations (77.17% in 2015). Cost of material consumed increased by 5.07% in 2016 over 2015. Yarn prices were increased by 3.45% in 2016 as compared to 2015 while Coal/Lignite prices were decreased by 7.02% in 2016 as compared to 2015. Color/Chemical prices increased by 8.32% in 2016 over 2015 and stores/packing materials prices were increased by 104.21% in 2016 as compared to 2015.

15.2 Power & Fuel

The power and fuel (electricity Expenses) spent was Rs. 106,966.57 (in thousands) which constitutes 6.73% of the total income from operations of the company.

15.3 Other Expenditure

Other expenditure (exclusion of Manufacturing Expenditure) constitutes 1.32% of total income from operations of the Company. The increase in other expenditure (exclusion of Manufacturing Expenditure) was 84.48% in 2016 over 2015 primarily due to pollution control expense.

16. SUSTAINABLE DEVELOPMENT

Sustainability has been deeply embedded into the Company's business and has become an integral part of its decision making process while considering social, economic and environmental dimensions. During the year 2015-16, a Sustainable Development was developed with a focus on the following areas:

16.1 Water Emissions

• Our Company is a member of Gujarat Eco-Textile Park (GETP) since 2014, The Park help us to reduce water pollution. The Company has also implemented various measures across all its operations to control fugitive emissions.

16.2 Air Emissions

• Initiatives were taken to reduce air pollution causes due to production processes. Company has taken license from Gujarat Pollution Control Board (GPCB). The officer's of the board often comes on a surprise visit to our factory and verify the level of air pollution. The samples are tested by GPCB in their own laboratory and report is issued to us.

17. HEALTH & SAFETY

Health & Safety (H&S) remains the Company's top priority. Our company is equipped with proper first aid facilities, Medical facilities and stretchers. The shift supervisors have been trained in basic life support techniques.

With regard to safety, two key areas of focus identified were Facility Management for the employees and Equipment, Tools & Material Management. The Facility Management initiative was implemented to ensure adequate welfare facilities for employees such as washrooms with bathing facilities, rest rooms, proper availability of drinking water etc. The Equipment, Tools & Material Management program ensured that the tools used by employees were safe and the company provides earplugs, helmet, nose & face mask, hand gloves, safety shoes to protect its employees. The process of screening of employees was made more stringent to ensure that the employees were aligned with the Company's objectives.

18. HUMAN RESOURCES

Many initiatives have been taken to support business through organizational efficiency, process change support, and various employees' engagement programs, which have helped the Organization, achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/functional capabilities in order to meet future talent requirement.

The Company's HR processes such as hiring and on boarding, fair transparent performance evaluation and talent management process, and market aligned policies have been seen as at good level practices in the Industry.

18.1 Employees of Choice:

The Company has positioned itself as one of the best companies to work for. Employees have option to work with the world class technologies and have flexibility to pursue different functions. Employees are encouraged to express their views and are empowered to work independently. Employees are given the opportunity to learn through various small projects, which make them look at initiatives from different perspectives and thus provide them with a platform to become result oriented. This has helped greatly in overall development of the employee and has significantly arrested the attrition rate.

18.2 Leadership Development:

As a part of leadership development, talented employees have been seconded to the senior leadership team to mentor them and prepare them for the next higher role. Apart from this, a large number of senior, middle and other employees are sent for leadership programs or are assigned to small independent projects, which are planned for identified talent.

18.3 Industrial Relation:

The Company shares relevant business information with the union in order to enlighten them and make them sensitive towards business requirements. This has helped to build a healthy relationship and resolve issue through mutual dialogue.

18.4 Individual Development Planning:

This is an annual process tied to business planning and the budget cycle, whereby the management in our organization establishes training goals and plans for employees of the organization.

19. CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors of the Company hereby confirms that the provisions of Section 135(1) of the Companies Act, 2013 is not applicable to our company.

20. BUSINESS RESPONSIBILITY REPORT (BRR)

The Board of Directors of the Company hereby confirms that, according to the provisions of Regulation 34(2)(f) of the Securities Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulation 2015, the give report on Business Responsibility Report (BRR) is not mandatorily applicable to our company, hence not annexed with Annual Report.

21. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company including the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosure. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls.

22. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance. The Company has a vigil mechanism and whistle blower policy to deal with unethical behavior, fraud or violation of the Company's code, if any. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company's website at the link: <http://www.rnbdenims.com/images/VIGIL%20MECHANISM%20FOR%20DIRECTORS%20AND> %20EMPLOYEES.pdf

23. POLICY FOR DETERMINATION OF MATERIALITY OF EVENTS

The Policy for Determining Materiality of Information / Events for reporting to the Stock Exchanges is framed pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 which enables the investors to make well-informed investment decisions and take a view on the Materiality of an event that qualifies for disclosure.

24. POLICY FOR PRESERVATION & ARCHIVAL OF DOCUMENTS

The Policy for Preservation & Archival of documents is framed pursuant to Regulation 9 & 30(8) of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, investors and concerned authority accessed preservation of documents and records of the Company through company's website, which is required to be maintained under the Companies Act, 2013 and Listing Regulation. Any disclosure of events or information which has been submitted by the Company to the Stock Exchanges will be available on the website of the Company for a period of 5 years from the date of its disclosure and shall thereafter be archived from the website of the Company for a period of 3 years. This policy basically deals with the retention and archival of corporate records.

25. COMPLIANCE WITH THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

Your Corporation is committed to prevention of sexual harassment of women at workplace and takes prompt action in the event of reporting of such incidents. In this regard, internal complaints committees have been constituted to deal with sexual harassment complaints, if any and conduct enquires.

There were no complaints received of sexual harassment during the financial year 2015-16.

26. DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

27. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board had appointed Mrs. Jyoti Arun Agarwal as Company Secretary cum compliance officer in the Board Meeting of the Company held on December 21, 2015 pursuant to the provisions of Section 203 and all other applicable provisions, if any, of the Companies Act, 2013 with effect from December 21, 2015.

Mr. Pradip Kanti Dave former Company Secretary cum compliance officer resigned from the services of the Company with effect from July 17, 2015.

The Board has placed on record its appreciation for the outstanding contributions made by Mr. Mr. Pradip Kanti Dave during their respective tenures of office

In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, Mr. Amitkumar A Dalmia (holding DIN: 00034642) retires by rotation and is eligible for re-appointment.

27.1 Policy on directors' appointment and remuneration

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

27.2 Meetings

During the year, Board Meetings and Committee Meetings were convened and held. The details of which are given herein below and also in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

28. 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 statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a. that in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies and applied them consistently and made judgment 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 and of the profit and loss of the company for that period;

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

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

29. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arm's length basis. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, which may have a potential conflict with the interest of the Company at large and the details of which is prescribed in Form AOC-2 as an "Annexure-A" attached to this report.

30. AUDITORS

30.1 Statutory Auditors

The Company's Auditors, Messrs Pradeep Singhi & Associates, Chartered Accountants, Surat hold office till the conclusion of the ensuing Annual General Meeting of the Company and are eligible for re-appointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for reappointment as Statutory Auditors of the Company. The auditors have also confirmed that they hold a valid certificate which is issued by the Peer Review Board of the Institute of Chartered Accountants of India.

30.2 Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its denim activity is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed Messrs V. M. Patel & Associates to audit the cost accounts of the Company for the financial year 2015-16 on a remuneration of Rs. 35,000/- plus Service tax, if applicable and out of pocket expenses. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Member's ratification for the remuneration payable to Messrs V. M Patel & Associates, Cost Auditors is included at Item No. 5 of the Notice convening the Annual General Meeting.

30.3 Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 The Board has appointed Messrs JAINAM N SHAH & CO, Practicing Company Secretary, Surat, to conduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report for the financial year ended March 31, 2016 is annexed herewith marked as "Annexure-B" to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

31. ENHANCING SHAREHOLDERS VALUE

Your Company believes that its Members are among its most important stakeholders.

Accordingly, your Company's operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively affect the socio-economic and environmental dimensions and contribute to sustainable growth and development.

32. CORPORATE GOVERNANCE

According to the Securities Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulation 2015, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms an integral part of this Report. The Report on Corporate Governance by Auditor is forming part of Annual Report.

33. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure-C".

34. EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in form MGT 9 is appended as "Annexure-D" to the Board's report.

35. PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197(12) read with Rule, 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the "Annexure-E" of the Annual Report.

36. RISK MANAGEMENT

Our Enterprise Risk Management encompasses practices relating to the identification, analysis, evaluation, treatment, mitigation and monitoring of the strategic, external and operational controls risks to achieving our key business objectives. Risk Management at our company seeks to minimize the adverse impact of these risks, thus enabling the Company to leverage market opportunities effectively and enhance its long-term competitive advantage. Several risks can impact the achievement of a particular business objective. Similarly, a single risk can impact the achievement of several business objectives. The focus of risk management is to assess risks and deploy mitigation measures.

37. ACKNOWLEDGEMENTS

Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors gratefully acknowledge all stakeholders of the Company viz. workers, staff, customers, members, dealers, vendors, banks, concerned authorities and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.

38. CAUTIONARY STATEMENT

Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

39. DISCLAIMER

Certain statements in this report relating to Company's objectives, projections, outlook, expectations, estimates, etc may be forward looking statements within the meaning of applicable laws and regulations. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, actual results or performance could differ materially from such expectations, projections, etc whether express or implied as a result of among other factors, changes in economic conditions affecting demand and supply, success of business and operating initiatives and restructuring objectives, change in regulatory environment, other government actions including taxation, natural phenomena such as floods and earthquakes, customer strategies, etc over which the Company does not have any direct control.

For and on behalf of The Board Of Directors,

R & B DENIMS LIMITED

Sd/- Rajkumar Mangilal Borana

 (Chairman & Managing Director)

DIN: 01091166

Place: SURAT

Date: 20/05/2016