BOARD'S REPORT

1. Your Directors take pleasure in presenting the Thirty Third Annual Report of your Company together with audited statement of accounts for the year ended on 31st March, 2016.

2. DIVIDEND

Your Directors regret their inability to recommend any dividend on the equity shares in view of the losses suffered by your Company during the year under review and carried forward losses of earlier years. They are also unable to pay any dividend on preference shares.

3. RESERVES

In view of the losses incurred by your Company, no amount has been transferred to general reserve.

4. REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS

The operational performance of the company showed major decline, with the loss at PBT stage going up to Rs.1813.33 lacs (arrived at after adjusting reported PBT for non-recurring expenses (net) of Rs.542.44 lacs) compared to loss of Rs.523.60 lacs in year 2014-15 (adjusted for non-recurring expenses (net) of Rs.1096.73 lacs). (Figures for previous year have been adjusted to remove impact of change in depreciation during that year in compliance with provisions of Schedule II of the Companies Act, 2013). Increase in interest cost by Rs.732 lacs is one of the major reasons for change in performance. The company paid interest to the secured creditors as well as on unsecured loans brought in by promoters to part-finance debt settlement under the Scheme of Arrangement as per the Scheme provisions. On the operational front, the performance has suffered both in Denim and Spinfab divisions mainly on account of lower volumes.

Production and sales volumes have declined both in Denim as well as in Spinfab Division with Denim division suffering more on export front primarily due to sluggish European markets and stiff competition following increased capacities on a macro level. The Spinfab division on the other hand also saw lower volumes, but it could penetrate more into domestic brand segment that provides better margins and thereby offsetting the negative impact of lower volumes to some extent.

Both the company's division continue to operate under severe limitations in terms of product offering, credit terms as well as product costing due to ageing machinery and working capital constraints. These factors have a severe adverse impact on the marketability of the products over and above the pricing and margin issues for the company. Competitors have considerable advantage when it comes to meeting the customer requirements in terms of changing fashion trends and product specifications as well as the operational efficiency affecting the product costs.

The reduced raw materials prices, especially on account of global slowdown, have helped the divisions maintain the product margins and have also helped ease the adverse impact of inflationary pressures on the prices of dyes/chemicals and other operational expenses.

The detailed discussion on performance is highlighted in management discussion and analysis attached to this report.

5. SCHEME OF ARRANGEMENT

The Scheme of arrangement for reconstruction and compromise between the Company and its equity shareholders, preference shareholders and secured creditors (hereinafter referred to as "the Scheme") under sections 391 to 394 of the Companies Act, 1956 read with Section 100 to 103 of the Companies Act, 1956 and Section 52 of the Companies Act, 2013 was sanctioned by the Hon’ble High Court of Gujarat vide Order dated 24.09.2015 and the same became effective on and from 5.10.2015 upon filing a certified copy of the High Court Order with the Registrar of Companies, Gujarat.

Accordingly, the Company has made payments to Secured Creditor in terms of the Scheme. However, allotment of Shares as part of secured debt settlement in terms of the Scheme to Asset Reconstruction Company (India) Ltd (ARCIL), one of the secured creditors, got delayed as the same were to be allotted simultaneously with the Rights Issue shares. Post Rights Issue formalities were delayed on account of litigation and Court order as detailed in the status on Rights Issue in this Report.

6. RIGHTS ISSUE

The Company came out with a Rights Issue of 8,00,85,089 equity shares of Rs. 10 each aggregating to Rs.8008.51 Lacs at par in the ratio of 24:10 to part-finance settlement of secured debt under Scheme of Arrangement u/s. 391 of the Companies Act, 1956. The issue closed on 2nd December, 2015 and the basis of allotment was approved by BSE Limited, the designated Stock Exchange, on 11th December, 2015. The process of refund, allotment and listing of shares was to be completed by 17th December, 2015, but the company could not complete these processes due to a status-quo order passed by the Debt Recovery Tribunal ("DRT"), Mumbai, restraining Bankers to the Issue from release of any funds and the Company from withdrawing the funds collected in the Rights Issue, in a pending case which was filed by HDFC Bank against the Company.

Subsequently, several legal cases and processes followed at DRT, the Debt Recovery Appellate Tribunal and Hon’ble Bombay High Court. As per various order of The Hon. Bombay High Court including final order dated 3rd May 2016, which directed the Bankers to release the funds collected under Rights Issue towards refund and release allotment money which allowed company to complete the further processes of the Rights Issue, allotment was made on 5th May, 2016 and refund amounts were processed on 7th May, 2016. The shares of the company under the Rights Issue have been listed upon completion of formalities.

7. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF YOUR COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENT RELATE AND THE DATE OF THE REPORT

There are no material changes and commitments which affect the financial position of the company occurring between the end of financial year and the date of this Report except as stated specifically in this Report.

8. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Your Company does not have any subsidiary, joint venture or associate company for the year ended 31st March, 2016.

9. DEPOSITS

The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.There were no unpaid or unclaimed deposits as on 31st March, 2016.

10. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, the information relating to Conservation of Energy, Technology Absorption and Foreign Exchange earnings & outgo forms part of this Report and annexed at Annexure-1.

 11. RISK MANAGEMENT

The Company has set up a risk management framework to identify, monitor, minimize, mitigate and report and also to identify business opportunities. The executive management oversees the risk management framework and the Audit Committee evaluates internal financial controls and risk management systems. In the opinion of Board, there are no risk which may threaten the existence of the Company.

12. CORPORATE SOCIAL RESPONSIBILITIES INITIATIVES

The requirements of corporate social responsibility in terms of Section 135 of the Companies Act, 2013 does not apply to your company.

13. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF COMPANIES ACT, 2013

There are no loans granted or guarantees given or security provided or investments made under Section 186 of the Companies Act, 2013.

14. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All transactions with Related Parties are placed before the Audit Committee and also at the Board of Directors for approval. Prior omnibus approval of the Audit Committee and Board of Directors is obtained for the transactions which are of a for foreseeable and repetitive nature. The transactions entered into pursuant to omnibus approval are placed before Audit Committee and Board of Directors on quarterly basis. The policy on Related Party Transaction (RPT) as adopted by the Board of Directors is available at the Company's website at the weblink, <http://www.ashima.in/Policy_Related_Party_Transactions.pdf>.

The members may note that all transactions entered into by the Company with the Related Parties were on arm's length basis and in the ordinary course of business and therefore provisions of Section 188 of the Companies Act, 2013 are not attracted. Thus disclosure in Form AOC-2 is not required. Details of all material transactions, if any, with related parties have been disclosed quarterly along with the compliance report on corporate governance. Transactions with related parties as per requirements of Accounting Standard 18 are disclosed in the notes to accounts annexed to financial statements.

15. NOMINATION AND REMUNERATION POLICY

A Nomination and Remuneration Policy has been formulated pursuant to the provisions of Section 178 and other applicable provisions of the Companies Act, 2013 and Rules thereto stating therein the Company's policy on nomination and remuneration of Directors, Key Managerial Personnel and Senior Management and approved by the Board of Directors at its meeting held on 07.03.2015. The said policy may be referred to, at the Company's website at <http://www.ashima.in>

16. ANNUAL EVALUATION OF BOARD'S PERFORMANCE

The Board of Directors has carried out an annual evaluation of its performance, its Committees of the Board of Directors and all individual Directors pursuant to the requirements of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and also in accordance with the policy laid down by the Nomination and Remuneration Committee (NRC) approved by the Board of Directors.

In a separate meeting of Independent Directors, performance of Non Independent Directors, performance of the Board as a whole and performance of the Chairman & Managing Director was evaluated. After such evaluation the Board came to the conclusion that the Board as a whole as well as all its Members individually and the Committees of the Board continued to adhere to the standards of good governance and continuous improvement in processes and procedures. The Board notes that every individual member of the Board and its Committees have contributed in the sustained operations and overall performance of the Company. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

17. ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92 of the Companies Act,2013, is included in this Report as Annexure-2.

18. WEBSITE OF YOUR COMPANY

Your Company maintains a website www.ashima.in  where detailed information of the Company and specified details in terms of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 have been provided.

19. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

During the year 4 meetings of the Board of Directors were held as required under the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details of Board meetings held during the financial year 2015-2016 have been furnished in the Corporate Governance Report forming part of this Annual Report.

20. DIRECTORS AND KEY MANAGERIAL PERSONNEL

There was no change in the Board of Directors of the company.

In accordance with the Article of Association of the Company and the provision of the Companies Act, 2013, Mrs. Koushlya Melwani, Director (DIN: 01575110) retires by rotation and being eligible seeks reappointment.

21. DIRECTORS' RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3) (c) and 134 (5) of the Act, that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had 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 and of the loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

(f) the Directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

22. DECLARATION OF INDEPENDENT DIRECTORS

All the Independent Directors have given their declaration to the Company stating their independence pursuant to Section 149(6) of the Companies Act, 2013. The terms and conditions of the appointment of Independent Directors have been disclosed on the website of the Company at www.ashima.in

23. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

In compliance with the requirements of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 the Company has put in place a Familiarization Program for the Independent Directors to familiarize them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of the Familiarization Program is available on the website of the Company www.ashima.in .

24. INSURANCE

The Company's plant, property, equipments and stocks are adequately insured against major risks. The Company has also taken Directors' and Officers' Liability Insurance Policy to provide coverage against the liabilities arising on them.

25. PARTICULARS OF EMPLOYEES

(A) The ratio of the remuneration of each director to the median employee's remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report and is annexed as Annexure - 3 to this Report.

(B) The statement containing particulars of employees as required under Section 197(12) of the Companies

Act, 2013 read with Rule 5(2) and Rule 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report. In terms of Section 136 of the Companies Act, 2013 the same is open for inspection at the Registered Office of the Company. Copies of this statement may be obtained by the members by writing to the Company Secretary.

26. STATUTORY AUDITORS

M/s. Dhirubhai Shah & Doshi, Chartered Accountants (Firm Registration No. 102511W) hold office upto the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment.

27. COST AUDITOR

In terms of the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors, on the recommendation of the Audit Committee, have appointed M/s. Ankit Sheth &Co., Cost Accountant (Membership No: M/ 34404) as Cost Auditor of the Company, for the financial year ending on 31st March, 2017, on a remuneration as mentioned in the Notice convening the 33rd Annual General Meeting for conducting the audit of the cost records maintained by the Company.

A Certificate from M/s. Ankit Sheth & Co., Cost Accountant has been received to the effect that their appointment as Cost Auditor of the Company, if made, would be in accordance with the limits specified under Section 141 of the Act and Rules framed thereunder.

28. SECRETARIAL AUDIT REPORT

Pursuant to provisions of Section 204 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company had appointed Mr. Tapan Shah, Practicing Company Secretary, Ahmedabad (Certificate of Practice No. 2839) to undertake the Secretarial Audit of the Company for the financial year ended 31st March, 2016. The Secretarial Audit Report for the financial year ended 31st March, 2016 is annexed herewith as Annexure - 4.

29. EXPLANATIONS/ COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY

The observations of Statutory Auditors in their report on the financial statements are self explanatory and therefore do not call for any further comments.

Mr. Tapan Shah, Practising Company Secretary was appointed to carry out the secretarial audit for the year ended 31st March, 2016 in terms of provisions of Section 204 of the Companies Act, 2013. The Secretarial Audit Report is annexed with this Report. There are no qualifications, reservations or adverse remarks in the said Secretarial Audit Report.

30. DISCLOSURE OF COMPOSITION OF AUDIT COMMITTEE AND VIGIL MECHANISM

The details of composition of Audit Committee have been furnished in the Corporate Governance Report forming part of this Annual Report.

Your Company has established Vigil Mechanism (whistle blower policy) for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report and displayed on the website of the Company.

31. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS

IMPACTING THE GOING CONCERN STATUS OF THE COMPANY

There has been no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and Company's operations.

32. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The details on Internal Control Systems and their adequacy are provided in the Management's Discussion and Analysis which forms part of this Report.

33. LISTING WITH STOCK EXCHANGES

Your Company is listed with the BSE Limited and National Stock Exchange of India Ltd. and the Company has paid the listing fees to each of the Exchanges.

34. AUDIT COMMITTEE

The composition and terms of reference of the Audit Committee has been given in the Corporate Governance Report forming a part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee.

35. CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34 (3) read with Schedule V (C) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 a report on Corporate Governance along with Management Discussion and Analysis Report and Certificate of compliance from M/s. Dhirubhai Shah & Doshi, Chartered Accountants, forms part of this report.

36. GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a. Issue of equity shares with differential rights as to dividend, voting or otherwise

b. Issue of shares (including sweat equity shares) to employees of the Company under any scheme including Employee Stock Option Scheme.

c. Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees.

37. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Directors state that during the year under review, there were no cases filed pursuant to Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

38. APPRECIATION

Your Directors express their gratitude for the dedicated services put in by all the employees of the Company.

39. ACKNOWLEDGEMENTS

Your Directors places on record their sincere thanks to the customers, vendors, investors, banks and financial institutions for the continued support. Your Directors are also thankful to the Government of India, State Government and other authorities for their support and solicit similar support and guidance in future.

For and on behalf of the Board

Chintan N. Parikh

Chairman and Managing Director

Place: Ahmedabad

Date: 14th May, 2016