DONEAR INDUSTRIES LIMITED ANNUAL REPORT 2005-2006 CHAIRMAN'S REPORT Dear Shareholders, The over-all growth of the Indian economy has resulted with positive indicators such as stable 8% annual growth, rising foreign exchange reserves, booming capital market, and steadily flowing Foreign Direct Investments (FDI). All this has not left the Indian textile industry untouched. To increase India's share in the world textile trade from the current 4% to 8% and to achieve an export value of US$ 50 billion by the year 2010, the Indian Government after an intensive interaction with the textile industry and Export Promotion Councils have formulated a, 'Vision 2010' document. It envisages growth for the Indian Textile Industry from the current US$37 billion, to a staggering more-than-double, US$85 billion by 2010. In the financial year 2005-06, your company registered gross sales of Rs.14174.13 Lacs, which is 14% higher than the previous financial year of 2004-05 and it posted a net profit of Rs.2450.56 Lacs, taking an upward leap of 32% in comparison to the year 2004-05. With result-oriented contributions from everyone, your Company continued to perform well in the financial year 2005-06. Encouraged with the company's performance, the Board of Directors in keeping with the company's tradition recommended a dividend of 75% on the enhanced share capital after the Board declared and allotted bonus shares in the ratio of 1:1 to all the shareholders in the financial year 2005-06. Progressively, to capitalize the upcoming opportunities in the textile industry, your Company has a well-laid expansion plan to augment the production capacity further. The new plant located at Surat with an investment of about Rs.120 Crores, will have an integrated Yarn Dyeing, Weaving and Progressing facility. This will increase the total production capacity from the current 11 million metres to 17.5 million metres of fabric annually. To conclude, your Company is well posed to reap the opportunities availed in the industry. The continued support of our business associates, Shareholders, banks, Government and employees will continue to be the company's greatest assets and enable us to achieve greater heights in the years to come. With Warm Regards, VISHWANATH L.AGARWAL Chairman