Dear Shareholders,

I am pleased to share with you my views on the changing trends witnessed in the globaltextiles business and the approach and effort being made in Himachal Fibres Limited tore-orient and adapt to the emerging trends and opportunities.

The textile industry in India is one of the hopeful divisions of Indian market. Itsupplies more than thirteen percent to trade production, 16.63 percent to export revenuesand four percent to the nation s GDP. In the forth coming year, the industry appears allset to make approximately twelve million career opportunities with a venture of US dollarsix billion in the field of textile tools and structure, and garment manufacturing by theend of 2015.

Indian textile industry has also shown signs of recovery. Indian textile industry needto concentrate on the cost optimization and value addition in order to compete with globalplayers. The economy is growing, but a number of adverse features are apparent and seem tobe here to stay such as persistent and stubborn inflation, unprecedented higher commodityand all other input costs, which are impediments to industrial progress. Though theReserve Bank of India has adopted tighter monetary policies to contain or reduceinflation, this has correspondingly resulted in hardening interest costs which is anotherburden that industry has to cope with.

The Indian industry foresees huge demand for industrial woven products for medical andautomotive applications. Demand for woven fabrics is anticipated to be rise vertically inthe sector of home textiles.

Some of the strengths of Indian Textiles Industry are large and potential domestic andinternational market, large pool of skilled and cheap labor, well-established industry,promising export potential etc.

Our resilient approach and our constant endeavour to positively embrace challengescombined with our diversified exposure to end markets enabled us to bear the impact. Ourstrategy and business model remain robust and relevant to the challenges and demands ofour markets. We are moving forward with plans that allow us to constantly evolve andinitiate early change, as opportunities present themselves.

The volatile increase in the prices of Cotton deeply impacted the yarn pricing. It is acommon practice across the industry that when the prices are increasing, the procurementof goods continue in anticipation of further price hike. But in the event of fall inprices, goods are bought for short-term consumption only. This results in inventorylosses. Our efficient inventory management enabled us to withstand a turbulent economicscenario. The impact was significantly lower than the industry.

Previously, there was a great demand for blended yarn for suiting and shirting. Butwith changing times, filament yarn being cheaper suits the current trend and preference.Our presence in the value-added segment of the yarn provides us flexibility to change ourproduct mix as per the market demand. Himachal Fibres Limited presence across the entirevalue chain has facilitated the growth of its clientele base.

We continued to invest towards developing and grooming new talent. With the industrybecoming significantly competitive, we have taken appropriate measures to maintain a highretention rate. Besides, we continued to enhance our focus on the community initiatives,environment monitoring, health, safety and ethical governance to maintain a sustainablebusiness practice.

Your Company is continuously keeps reviewing its strategy in the light of the ongoingchanges. We also adapt to changing requirements of customers by realigning our product mixand skill set. India exports 40% of its textile, so we have to be alive to what happens inthe rest of world and keep making efforts to learn, adapt and improve with a spirit tocreate a cutting edge in competiveness.

Managing Director