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-20 Size: 6-10

SS-202 Size: 6-10

SS-203L Size: 2-4, 5-7

R E L A X O F O O T W E A R S L I M I T E D R e g d . O f f i c e : 3 1 6 - 3 1 9 , A l l i e d H o u s e , P lot N o . 2 ,

I n d e r l o k C h o w k , D e l h i - 1 1 0 0 3 5

A T T E N D A N C E S L I P

Please c o m p l e t e th is a t t e n d a n c e sl ip a n d hand i t over a t t h e e n t r a n c e c o u n t e r a t Sri Sa t ya Sai I n te rna t i ona l C e n t r e , Lodhi R o a d Inst i tu t iona l A r e a , P raga t i V ihar , N e w Delhi - 110 003 on M o n d a y , t h e 24 th S e p t e m b e r , 2007 a t 10.30 a . m .

NAME OF M E M B E R

FOLIO N U M B E R NO. OF SHARES

* D P I D N O . * C L I E N T ID NO.

N A M E O F M E M B E R / P R O X Y

SIGNATURE OF M E M B E R / P R O X Y

NOTES 1 . M e m b e r s / P r o x y ho lders a re reques ted t o br ing the i r cop ies o f t h e A n n u a l Repor t w i t h t h e m to t h e m e e t i n g . 2 . For t h e c o n v e n i e n c e o f M e m b e r s , persons o the r t h a n M e m b e r s / p r o x i e s w i l l not be a l l o w e d into t h e m e e t i n g .

P R O X Y F O R M

Folio No DP ID.

No . o f S h a r e s Cl ient I D .

I/We. of

.be ing a M e m b e r / M e m b e r s of or fa i l ing h im /he r of

.vote for me /us a n d on my /ou r beha l f a t t h e 2 3 r d A n n u a l G e n e r a l M e e t i n g o f t h e C o m p a n y t o be held on M o n d a y , t h e 2 4 t h day o f S e p t e m b e r , 2007 a n d a t any A d j o u r n m e n t thereof .

S i g n e d th is day o f S e p t e m b e r , 2007 S I G N E D .

Affix R e . 1.00 Revenue

S t a m p

No te : This Proxy to be va l id s h o u l d be d e p o s i t e d a t t h e Reg is te red of f ice o f t h e c o m p a n y not less t h a n 48 hours be fo re t h e t i m e for ho ld ing t h e m e e t i n g

NOTICE Notice is hereby given that the 23rd Annual General Meeting of the Members of Relaxo Footwears Limited will be held on Monday, the 24th day of September 2007 at l0.30a.m.atSriSathyaSai International Centre & School, Lodhi Road.PragatiVihar, New Delhi-1 10003 to transact the following business:

O R D I N A R Y B U S I N E S S

1. To receive, consider and adopt the Audited Balance Sheet as at 31 st March 2007 and the Profit and Loss Account for the year ended on that date together with the Reports of Directors and Auditors thereon.

2. To appoint a Director in place of Mr.S.K.Sapra who retires by rotation as a Director and, being eligible, offers himself for re-appointment.

3. To declare dividend.

4. To appoint Statutory Auditors to hold office from the conclusion of this Meeting until the conclusion of the next Annual General Meeting and to fix their remuneration.

S P E C I A L B U S I N E S S

5. To consider, and if thought fit, to pass, with or without modification(s), the following resolution as an Ord inary Resolut ion:

"RESOLVEDTHAT Mr.Vivek Kumar, who was appointed as an Additional Director at the meeting of the Board of Directors of the Company held on 30th January,2007, and whose term expires at the ensuing Annual General Meeting of the Company, and for the appointment of whom the Company has received a notice under Section 257 of the Companies Act, 1956, from a member proposing his candidature for the office of Director, be and is hereby appointed as a Director of the Company whose period of office will be liable to determination by retirement by rotation."

6. To consider and, if thought fit, to pass, with or without modification(s),the following resolution as a Special Resolution:

"RESOLVEDTHAT subject to the approval of shareholders and pursuant to the provisions of Section 198,269,309,31 I and other applicable provisions, if any, of the Companies Act, 1956 Mr. Nikhil Dua be and is hereby appointed as Whole Time Director of the Company on the following terms and conditions :-

1. Period: Three years commencingfrom lstjanuary,2008.

2 . R e m u n e r a t i o n : Salary (in the pay scale of 73.000-10.500-94.000)

Amount (in Rs.) Basic Salary 73,000/-HRA 43,800/-Medical Reimbursement 6,083/-Bonus 6,083/-

Notwithstanding anything contained hereinabove, where in any financial year during the currency of tenure of Mr. Nikhil Dua asWholeTime Director, if the Company has no profits or its profits are inadequate, he shall be paid a monthly remuneration inclusive of salary, dearness allowance, perquisites or any other allowance as may be allowed as per the provisions of the Companies Act, 1956 from time to time.

In addit ion to the remunerat ion as detai led here inabove, Mr. Nikhil Dua shall also be eligible for the fol lowing perquisites:

a) Contribution to Provident Fund, Superannuation Fund or Annuity Fund to the extent these either singly or put together are not taxable under the IncomeTaxAct, 1961.

b) Gratuity payable at a rate not exceeding half month's salary for each completed year of service.and c) Encashment of leave at the end of the tenure. d) OtherAllowances as per Company Rules.

3. No sitting fees for attending the meetings of the Board of Directors/ Committees thereof shall be paid to Mr. Nikhil Dua till the time he is functioning asWholeTime Director.

NOTES Particulars Amountf ln Rs.) Basic 68000 House RentAllowance 40800 Employer's Contribution to PF 8160 Medical Reimbursement 5666 restricted to one month's salary Bonus restricted to one month s salary 5666

and such other allowances .perquisites,benefits and amenities as applicable to the Company's Executives in the similar grade after necessary approvals from the Central Government.

The Directors Relatives (Office or Place of Profit) Rules, 2003 (the Rules), inter alia, provide that no appointment for an office or place of profit in a company shall take effect unless approved by the Central Government on an application in respect of

(a) Partner or relative of a director or manager or m) Firm in which such director or manager.or relative of either is a partner;or (c) Private company of which such director or manager or relative, if either, is a director or member, As the remuneration payable to Mr.G aurav Dua is more than Rs. 50,000/- per month, approval of the Central Government is also required for the appointment of and payment of remuneration to him in addition to the approval of the shareholders, under Section 314( IB) of the Companies Act, 1956, is necessary. The Board of Directors of the Company accordingly recommends the resolution for approval of the Members. Mr. Ramesh Kumar Dua, Mr. Mukand Lai Dua and Mr. Nikhil Dua are interested in the passing of this resolution.

I T E M 9

Mr. Nitin Dua, son of Mr. Mukand Lai Dua, holds a Masters Degree in Marketing from Apeejay School of Management and has an experience of more than three years in the Footwear Industry. He has a rich experience of the Retail Industry.The Board of Directors of the Company at its meeting held on 31 st July, 2007 approved, subject to the approval of the shareholders of the Company and the approval of the Central Government, the appointment of Mr. Nitin Dua as Joint Vice-President (Retail) in the Company on the following remuneration structure.

Particulars Amountjfin Rs.) Basic 66000 House RentAllowance 39600 Employer's Contribution to PF 7920 Medical Reimbursement 5500 restricted to one month's salary Bonus restricted to one month s salary 5500

and such other allowances .perquisites,benefits and amenities as applicable to the Company's Executives in the similar grade after necessary approvals from the Central Government.

The Directors Relatives (Office or Place of Profit) Rules, 2003 (the Rules), inter alia, provide that no appointment for an office or place of profit in a company shall take effect unless approved by the Central Government on an application in respect of

a) Partner or relative of a director or manager or m Firm in which such director or manager.or relative of either is a partner;or c) Private company of which such director or manager or relative, if either, is a director or member, As the remuneration payable to Mr. Nitin Dua is more than Rs. 50,000/- per month, approval of the Central Government is also required for the appointment of and payment of remuneration to him in addition to the approval of the shareholders, under Section 314( IB) of the CompaniesAct, 1956,is necessary. The Board of Directors of the Company accordingly recommends the resolution for approval of the Members. Mr. Ramesh Kumar Dua, Mr. Mukand Lai Dua and Mr. Nikhil Dua are interested in the passing of this resolution.

For R E L A X O F O O T W E A R S L IMITED

Place: Delhi ( S A N D E E P C H A N D N A ) D a t e : July 31,2007 C O M P A N Y S E C R E T A R Y

Quality. Ra

NOTES

I. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote instead of himself and such proxy need not be a member of the Company.The proxies, in order to be effective, must be received by the Company not less than 48 hours before the commencement of 23rd Annual General Meeting.

II. a) The Register of Members and Share Transfer Books of the Company shall remain closed from Tuesday, 18th September,2007to Monday,24th September,2007 (both days inclusive).

b) Dividend on equity shares of the Company, as recommended by the Board of Directors, if declared at the Annual General Meeting, will be paid on or after Monday, 24th September, 2007.

c) Members may please note that the dividend warrants/ drafts are payable at par at the designated branches of the bank for an initial period of 6 months only. Thereafter, the dividend warrant on revalidation is payable only at limited centres. The members are, therefore advised to encash dividend warrants/drafts within the initial validity period.

d) All documents referred to in the accompanying Notice are open for inspection at the Registered office of the Company on all the working days between 10.00 a.m. and 1.00 p.m. up to the date of Annual General Meeting, except on Sundays, and other Holidays.

e) Members desiring any information on the Accounts are requested to write to the Company at its Registered office, 316-319, Allied House, Inderlok, Old Rohtak Road, Delhi-110035, giving at least 7 days notice prior to the date of Annual General Meeting to enable the Management to collect and keep the information ready.

f) With a view to eliminate any possibility of forgery or fraud, the shareholders are requested to furnish their Bank Account Number (current/saving), the name of the Bank and Branch where they would like to deposit their dividend warrant/ draft for encashment. These particulars will be printed on the Cheque Portion of the dividend warrant/ draft. This should be furnished by the Sole Holder or the first named Shareholder to Company or its Share Transfer Agent i.e. M/s Karvy Computer-share Private Limited

Shareholders/ Beneficial owners of shares are further advised that they should furnish their bank account details to depository participants and the Company will not entertain any direct request from such shareholders for deletion/change in such bank details.The bank mandate for shares held in physical form will not be automatically applied for shares held in electronic form.

g) Bank Details / Intimation of Change of Address should reach the Company or its Share Transfer Agents i.e. M/s Karvy Computershare Private Limited, to enable the Company to give effect to such change.

h) Members are hereby informed that dividends which remain unclaimed / unencashed over a period of 7 Years have to be transferred by the Company to Investor Education & Protection Fund (IEPF) constituted by the Central Government under section 205A and 205C of the Companies Act, 1956. Further under the Companies Act, 1956 no claim shall lie for the unclaimed dividend from IEPF by the shareholders.

The details in respect of unclaimed dividend when due for transfer to the said fund are given below:

Financial Date of Date of Transfer Last date Due date A m o u n t o f Year Declarat ion to Unpaid of c la im of t ransfer Div idend

Dividend a/c toIEPF (Rs.) 31.03.2000 22.09.00 29.10.00 28.10.07 27.11.07 30,185 31.03.2001 14.09.01 21.10.01 20.10.08 19.11.08 34,881 31.03.2002 26.09.02 02.11.02 01.11.09 30.11.09 59,291 31.03.2003 26.09.03 02.11.03 01.11.10 30.11.10 52,228 31.03.2004 24.09.04 30.10.04 29.10.11 28.11.11 330 31.03.2005 22.09.05 28.10.05 27.10.12 26.11.12 1,315 31.03.2006 21.09.06 27.10.06 26.10.13 25.11.13 19,772

III. An explanatory Statement as required under the provisions of Section 173(2) of the Companies Act, 1956 is annexed to this notice.

NOTES Explanatory S t a t e m e n t pursuant to Sect ion 173(2) of the Companies A c t , 1956:

I T E M 5

Mr.Vivek Kumar was appointed as Additional Director in the meeting of the Board of Directors held on 30th January, 2007, and holds office till the date of the ensuing Annual General Meeting.The Company has received a notice under Section 257 of the Companies Act, 1956 proposing his candidature for the office of Director liable to retire by rotation. The resolution is put up for approval by the shareholders of the Company.

None of the Directors except Mr.Vivek Kumar himself is interested or concerned in the passing of the resolution.

I T E M 6

Mr. Nikhil Dua is a professionally qualified Director of the Company who has been rendering services for the shoe division of the company for more than ten years. Considering his qualifications and contribution to the growth of the company, the Board feels that he must be madeWholeTime Director and remunerated appropriately.

Your directors commend the resolution for your approval.

Mr. Ramesh Kumar Dua, Managing Director, Mr. Mukand Lai Dua.WholeTime Director and Mr. Nikhil Dua himself are concerned in the passing of the resolution.

I T E M 7

Mr. Ritesh Dua, son of Mr. Mukand Lai Dua, holds a Masters Degree in Business Administration (Finance) from Fore School of Management, New Delhi, has an experience of more than seven years in the Footwear Industry

The Board of Directors of the Company at its meeting held on 31st July, 2007 approved, subject to the approval of the shareholders of the Company and the approval of the Central Government, the appointment of Mr. Ritesh Dua as Joint Vice-President (Finance) in the Company on the following remuneration structure.

Part iculars A m o u n t Q n Rs.) Basic 70000 House RentAllowance 42000 Employer's Contribution to PF 8400 Medical Reimbursement 5833 restricted to one month's salary Bonus restricted to one month s salary 5833

and such other allowances .perquisites, benefits and amenities as applicable to the Company's Executives in the similar grade after necessary approvals from the Central Government.

The Directors Relatives (Office or Place of Profit) Rules, 2003 (the Rules), inter alia, provide that no appointment for an office or place of profit in a company shall take effect unless approved by the Central Government on an application in respect of (a) Partner or relative of a director or manager or m) Firm in which such director or manager, or relative of either is a partner; or (c) Private company of which such director or manager or relative, if either, is a director or member, As the remuneration payable to Mr. Ritesh Dua is more than Rs. 50,000/- per month, approval of the Central Government is also required for the appointment of and payment of remuneration to him in addition to the approval of the shareholders, under Section 314(1 B) of the Companies Act, 1956, is necessary. The Board of Directors of the Company accordingly recommends the resolution for approval of the Members. Mr. Ramesh Kumar Dua, Mr. Mukand Laf Dua and Mr. Nikhil Dua are interested in the passing of this resolution.

I T E M 8

Mr. Gaurav Dua, son of Mr. Ramesh Kumar Dua, holds a Masters Degree in Marketing from University of Wales, Cardiff (U.K.) and has an experience of more than five years in the Footwear Industry. He has taken extensive hands-on training in marketing of footwear in the Indian Market.

The Board of Directors of the Company at its meeting held on 31 st July, 2007 approved, subject to the approval of the shareholders of the Company and the approval of the Central Government, the appointment of Mr. Gaurav Dua as Joint Vice-President (Marketing) in the Company on the following remuneration structure.

R E L A X O F O O T W E A R S L I M I T E D R e g d . O f f i c e : 3 1 6 - 3 1 9 , A l l i e d H o u s e , P lot N o . 2 ,

I n d e r l o k C h o w k , D e l h i - 1 1 0 0 3 5

A T T E N D A N C E SL IP

Please c o m p l e t e th is a t t e n d a n c e slip a n d h a n d i t over a t t h e en t rance coun te r a t Sri Sa tya Sai In ternat iona l C e n t r e , Lodhi Road Inst i tu t ional A r e a , Praga t i V ihar , N e w Delhi - 110 003 on M o n d a y , t he 24 th Sep tembe r , 2007 a t 10.30 a . m .

NAME OF M E M B E R

FOLIO N U M B E R NO. OF SHARES

* D P I D N O . *CL IENT ID NO.

N A M E O F M E M B E R / P R O X Y

SIGNATURE OF M E M B E R / P R O X Y

NOTES :-1 . M e m b e r s / P r o x y ho lders are reques ted to br ing their cop ies o f t h e A n n u a l Repor t w i t h t h e m to t h e m e e t i n g . 2 . For t he c o n v e n i e n c e o f M e m b e r s , persons o ther t han M e m b e r s / p r o x i e s wi l l no t be a l l o w e d into the m e e t i n g .

P R O X Y F O R M

Folio No

No . o f Shares. DP ID.

Cl ient I D .

I/We. of

.be ing a M e m b e r / M e m b e r s of or fa i l ing h im /he r

of

.vote for me/us and on my/our beha l f a t t h e 23 r d A n n u a l G e n e r a l M e e t i n g o f t h e

C o m p a n y to b e h e l d on M o n d a y , t h e 2 4 t h day o f Sep tember , 2007 a n d a t any A d j o u r n m e n t thereof .

S i g n e d this day o f S e p t e m b e r , 2007 S I G N E D .

Affix Re. 1.00 Revenue

S t a m p

No te : This Proxy to be va l id s h o u l d be depos i t ed at t h e Reg is tered of f ice of t h e c o m p a n y no t less t han 48 hours be fo re the t ime for ho ld ing t h e m e e t i n g

B O A R D O F D I R E C T O R S R a m e s h K u m a r Dua M u k a n d Lai Dua N i k h i l D u a G .C . Ras tog i S.K. Sapra V i v e k K u m a r

M a n a g i n g D i rec tor W h o l e T i m e D i rec tor D i rec tor D i rec tor D i rec tor D i rec tor

C O M P A N Y S E C R E T A R Y S a n d e e p C h a n d n a

C H I E F F I N A N C I A L O F F I C E R Sush i l Bat ra

A U D I T O R S G U P T A & J H U N J H U N W A L A C h a r t e r e d A c c o u n t a n t s 9 , Darya G a n j , N e w Delhi -110 002

B A N K E R S STATE B A N K O F I N D I A M a y a p u r i , N e w Delhi - 110 064

S H A R E T R A N S F E R A G E N T S M/s Karvy C o m p u t e r s h a r e P r i va te L imi ted 4 6 , A v e n u e 4 , S t ree t N o . 1 , Ban ja ra Hills H y d e r a b a d - 5 0 0 0 3 4

R E G I S T E R E D O F F I C E R E L A X O F O O T W E A R S L I M I T E D 3 1 6 - 3 1 9 , A l l ied H o u s e , Inder lok C h o w k , O l d R o h t a k R o a d , De lh i - 110035

W O R K S

P l o t N o . 3 2 6 & 327 , M I E , B a h a d u r g a r h , H a r y a n a

A - 1 1 3 0 & 1 1 3 0 (A) R I ICO Industr ia l A rea P h a s e - I l l , B h i w a d i , R a j a s h t a n

3 0 / 3 / 2 , Rakba M o o j a H a s a n p u r , Tikri Bo rde r ( N e a r Sa les Tax Of f i ce ) , B a h a d u r g a r h ( H a r y a n a )

8 3 - 9 2 , S I D C U L Indust r ia l A r e a , B H E L , H a r i d w a r ( U t t a r a n c h a l )

CONTENTS

D i r e c t o r s ' R e p o r t

C o r p o r a t e G o v e r n a n c e R e p o r t

A u d i t o r s ' R e p o r t

B a l a n c e S h e e t

P r o f i t & Loss A c c o u n t

C a s h F l o w S t a t e m e n t

Page No.

2 -5

6 - 1 4

1 5 - 1 8

19

2 0

21

S c h e d u l e s 2 2 - 2 7

A c c o u n t i n g P o l i c i e s & N o t e s o n A c c o u n t s 2 8 - 3 4

B a l a n c e S h e e t A b s t r a c t 3 5

LrUTJTJTJTJTJTJT - rLTLr '

Directors' Report

Dear M e m b e r s , T h e B o a r d o f D i r e c t o r s o f y o u r C o m p a n y t a k e p l e a s u r e i n C o m p a n y for t h e F i n a n c i a l Y e a r 2 0 0 6 - 0 7 .

p r e s e n t i n g t he i r r epo r t o n t h e w o r k i n g o f t h e

1 . F I N A N C I A L R E S U L T S

Par t iculars 2 0 0 6 - 0 7

(Rs. in Lacs) 2 0 0 5 - 0 6

Tota l I n c o m e 2 3 6 8 7 . 6 2 2 0 1 8 3 . 4 0 To ta l E x p e n d i t u r e 2 1 7 3 4 . 9 0 1 8 9 9 2 . 5 5 Pro f i t b e f o r e D e p r e c i a t i o n & Tax 1 9 5 2 . 7 2 1 1 9 0 . 8 5 D e p r e c i a t i o n 8 3 0 . 1 7 7 3 3 . 3 2 Pro f i t b e f o r e Tax 1 1 2 2 . 5 5 4 5 7 . 5 3 P r o v i s i o n for Taxa t i on 4 6 2 . 9 9 131 .68 Pro f i t a f te r Tax 6 5 9 . 5 6 3 2 5 . 8 5 A d d : - Balance in P & L A / c 2 4 3 . 5 6 3 0 1 . 4 0 A d d / ( L e s s ) : - Pr ior pe r i od a d j u s t m e n t 3 0 . 5 3 3 7 . 2 7 A m o u n t a v a i l a b l e fo r A p p r o p r i a t i o n 9 3 3 . 6 5 6 6 4 . 5 2 A p p r o p r i a t i o n : -D i v i d e n d 9 0 . 0 1 9 0 . 0 1 Tax on D i v i d e n d 15 .30 12 .62 Transfer to G e n e r a l Reserve 5 0 0 . 0 0 3 0 0 . 0 0 Ba lance carr ied to Ba lance Shee t 3 2 8 . 3 4 2 6 1 . 8 9

2 . D I V I D E N D T h e B o a r d o f D i r e c t o r s r e c o m m e n d s a d i v i d e n d @ 1 5 % o n t h e e q u i t y s h a r e s o f t h e C o m p a n y f o r t h e y e a r e n d e d 3 1 " M a r c h , 2 0 0 7 .

3 . A U D I T O R S T h e S t a t u t o r y A u d i t o r s o f t h e C o m p a n y , M / s G u p t a & J h u n j h u n w a l a , C h a r t e r e d A c c o u n t a n t s h o l d o f f i c e t i l l t h e c o n c l u s i o n o f t h e e n s u i n g A n n u a l G e n e r a l M e e t i n g a n d a r e e l i g i b l e f o r r e -a p p o i n t m e n t . T h e C o m p a n y h a s r e c e i v e d a l e t t e r f r o m t h e m s t a t i n g t h a t t h e i r r e - a p p o i n t m e n t w o u l d b e w i t h i n t h e l i m i t s p r e s c r i b e d u n d e r S e c t i o n 2 2 4 ( 1 B ) o f t h e C o m p a n i e s A c t , 1 9 5 6 .

4 . A U D I T O R S ' R E P O R T T h e o b s e r v a t i o n s o f t h e A u d i t o r s o n t h e A c c o u n t s f o r t h e y e a r u n d e r r e p o r t h a v e b e e n s u i t a b l y e x p l a i n e d i n t h e N o t e s t o A c c o u n t s a n d d o n o t r e q u i r e a n y f u r t h e r c l a r i f i c a t i o n .

5 . D I R E C T O R S M r . S . K . S a p r a r e t i r e s b y r o t a t i o n a t t h e e n s u i n g A n n u a l G e n e r a l M e e t i n g a n d b e i n g e l i g i b l e , o f f e r s h i m s e l f f o r r e a p p o i n t m e n t .

M r . V i v e k K u m a r w a s a p p o i n t e d a s a n A d d i t i o n a l D i r e c t o r a t t h e m e e t i n g o f t h e B o a r d o f D i r e c t o r s h e l d o n 3 0 t h J a n u a r y , 2 0 0 7 . H e h o l d s o f f i c e o f d i r e c t o r s h i p u p t o t h e d a t e o f t h e e n s u i n g A n n u a l G e n e r a l M e e t i n g . T h e C o m p a n y h a s r e c e i v e d n o t i c e u n d e r s e c t i o n 2 5 7 f r o m a m e m b e r p r o p o s i n g h is a p p o i n t m e n t a s d i r e c t o r l i a b l e t o r e t i r e b y r o t a t i o n .

Y o u r D i r e c t o r s r e c o m m e n d h i s a p p o i n t m e n t a s a D i r e c t o r o f t h e C o m p a n y .

2

L r L T i J i r u i j n r m r t r L r '

Directors' Report

N o n e o f t h e D i r e c t o r s e x c e p t M r . V i v e k K u m a r h i m s e l f i s c o n c e r n e d o r i n t e r e s t e d i n t h e p a s s i n g o f t h e r e s o l u t i o n .

6 . C O R P O R A T E G O V E R N A N C E R e p o r t o n C o r p o r a t e G o v e r n a n c e f o r m s a p a r t o f a n d i s a n n e x e d t o t h e D i r e c t o r s ' R e p o r t .

7 . F I X E D D E P O S I T S T h e C o m p a n y h a s n o t r a i s e d a n y m o n e y b y w a y o f F i x e d D e p o s i t s u n d e r s e c t i o n 5 8 A o f t h e C o m p a n i e s A c t , 1 9 5 6 d u r i n g t h e y e a r u n d e r r e v i e w .

8 . D I R E C T O R S ' R E S P O N S I B I L I T Y S T A T E M E N T P u r s u a n t t o S e c t i o n 2 1 7 ( 2 A A ) o f t h e C o m p a n i e s A c t , 1 9 5 6 , y o u r D i r e c t o r s s t a t e a s u n d e r :

1 . T h a t t h e a p p l i c a b l e A c c o u n t i n g S t a n d a r d s h a v e b e e n f o l l o w e d i n t h e p r e p a r a t i o n o f t h e A n n u a l A c c o u n t s f o r t h e f i n a n c i a l y e a r 2 0 0 6 - 0 7 , a n d t h a t t h e r e h a v e b e e n n o m a t e r i a l d e p a r t u r e s t h e r e f r o m ;

2 . T h a t t h e y h a v e s e l e c t e d s u c h a c c o u n t i n g p o l i c i e s a n d a p p l i e d t h e m c o n s i s t e n t l y a n d m a d e j u d g m e n t s a n d e s t i m a t e s t h a t a r e r e a s o n a b l e a n d p r u d e n t s o a s t o g i v e a t r u e a n d f a i r v i e w o f t h e s t a t e o f a f f a i r s o f t h e C o m p a n y a t t h e e n d o f t h e f i n a n c i a l y e a r a n d o f t h e p r o f i t o f t h e C o m p a n y f o r t h e y e a r u n d e r r e v i e w .

3 . T h a t t h e y h a v e t a k e n p r o p e r a n d s u f f i c i e n t c a r e f o r t h e m a i n t e n a n c e o f a d e q u a t e a c c o u n t i n g r e c o r d s i n a c c o r d a n c e w i t h t h e p r o v i s i o n s o f t h e C o m p a n i e s A c t , 1 9 5 6 f o r s a f e g u a r d i n g t h e a s s e t s o f t h e C o m p a n y a n d f o r p r e v e n t i n g a n d d e t e c t i n g f r a u d a n d o t h e r i r r e g u l a r i t i e s ;

4 . T h a t t h e y h a v e p r e p a r e d t h e A n n u a l A c c o u n t s o n a g o i n g c o n c e r n b a s i s .

9 . C O N S E R V A T I O N O F E N E R G Y . T E C N O L O G Y A B S O R P T I O N . F O R E I G N E X C H A N G E E A R N I N G S A N D O U T G O :

A T h e p r o v i s i o n s o f S e c t i o n 2 1 7 ( 1 ) ( e ) o f t h e C o m p a n i e s A c t , 1 9 5 6 r e a d w i t h t h e C o m p a n i e s ( D i s c l o s u r e o f P a r t i c u l a r s i n t h e R e p o r t o f B o a r d o f D i r e c t o r s ) R u l e s , 1 9 8 8 r e g a r d i n g t h e c o n s e r v a t i o n o f e n e r g y a r e n o t a p p l i c a b l e t o o u r C o m p a n y .

B T E C H N O L O G Y A B S O R P T I O N I R e s e a r c h a n d D e v e l o p m e n t

a ) S p e c i f i c a r e a s i n w h i c h R & D c a r r i e d o u t b y t h e C o m p a n y : - I m p o r t s u b s t i t u t i o n o f v a r i o u s c o m p o n e n t s a n d s p a r e s . - P r o d u c t / P r o c e s s d e v e l o p m e n t . - W a s t e r e c y c l i n g . - R a w m a t e r i a l & C h e m i c a l s u b s t i t u t i o n .

b) B e n e f i t s d e r i v e d as a r e s u l t of R & D: - I m p r o v e m e n t i n q u a l i t y . - D e v e l o p m e n t o f n e w p r o d u c t / p r o c e s s .

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L r L r L r \ n j a n j T j ~ L n _ n _ r

Directors' Report

c ) F u t u r e p l a n o f A c t i o n : - C o n t i n u o u s d e v e l o p m e n t o f p r o d u c t s a n d p r o c e s s e s . -To c o n t i n u e R & D w o r k t o a c h i e v e e x c e l l e n c e i n F o o t w e a r I n d u s t r y .

d ) E x p e n d i t u r e o n R & D :

- E x p e n s e s o f R s . 1.18 l a c s h a v e b e e n i n c u r r e d f o r R & D .

I I T e c h n o l o g y a b s o r p t i o n , a d a p t a t i o n & i n n o v a t i o n

a ) E f f o r t s m a d e t o w a r d s t e c h n o l o g y a b s o r p t i o n , a d a p t a t i o n & i n n o v a t i o n : - I n t r o d u c t i o n o f l o w s h r i n k a g e f o o t w e a r . - I n t r o d u c t i o n o f L i g h t w e i g h t f o o t w e a r .

b ) B e n e f i t s d e r i v e d a s a r e s u l t o f t h e a b o v e e f f o r t s : - B e t t e r m a r k e t a c c e p t a n c e . - I m p r o v e m e n t i n q u a l i t y . - R e d u c t i o n i n p r o c e s s c y c l e t i m e . - R e d u c t i o n i n w a s t a g e & p r o c e s s l o s s e s .

- R e d u c t i o n i n o v e r a l l c o s t o f p r o d u c t i o n

c ) T e c h n o l o g y i m p o r t e d d u r i n g last f i v e y e a r s NIL

C F O R E I G N E X C H A N G E E A R N I N G S A N D O U T G O

a ) A c t i v i t i e s r e l a t i n g t o e x p o r t i n i t i a t i v e s t a k e n t o i n c r e a s e e x p o r t s , d e v e l o p m e n t o f n e w e x p o r t f o r p r o d u c t s a n d e x p o r t s p l a n s : T h e C o m p a n y h a s s t a r t e d e x p o r t b y d e v e l o p i n g n e w m a r k e t .

b ) T o t a l F o r e i g n C u r r e n c y u s e d a n d e a r n e d U s e d Rs . 2 8 3 0 . 0 4 L a c s E a r n e d Rs . 2 6 . 5 2 Lacs

10. H U M A N R E S O U R C E S M A N A G E M E N T & I N D U S T R I A L R E L A T I O N S T h e I n d u s t r i a l R e l a t i o n s i n a l l t h e u n i t s o f t h e C o m p a n y r e m a i n e d c o r d i a l a n d p e a c e f u l t h r o u g h o u t t h e y e a r .

1 1 . E N V I R O N M E N T A N D S A F E T Y A d e q u a t e m e a s u r e s f o r s a f e g u a r d i n g t h e s a f e t y a n d h e a l t h o f e m p l o y e e s a n d l a b o u r e r s w e r e i n s t a l l e d a t t h e p l a n t s o f t h e C o m p a n y . T h e C o m p a n y h a s a l s o i n s t a l l e d f i r e f i g h t i n g e q u i p m e n t a t a l l m a n u f a c t u r i n g p l a n t s a n d w o r k e r s / s t a f f a r e t r a i n e d t o h a n d l e t h e s e e q u i p m e n t e f f e c t i v e l y i n c a s e o f n e e d . T h e r e w a s n o m a j o r a c c i d e n t d u r i n g t h e y e a r .

12. Q U A L I T Y M A N A G E M E N T Y o u r C o m p a n y h a s b e e n c e r t i f i e d f o r I S O 9 0 0 1 : 2 0 0 0 b y B r i t i s h S t a n d a r d s I n s t i t u t e (B .S . I . ) . T h i s

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Directors' Report

c e r t i f i c a t i o n e n a b l e s u s a s a n o r g a n i s a t i o n t o i m p r o v e p r o d u c t q u a l i t y a n d e n h a n c e p r o d u c t i v i t y . T h i s a s s e s s m e n t s i g n i f i e s y o u r C o m p a n y ' s c a p a b i l i t y t o m a n a g e a n d c o n t r o l m a n u f a c t u r i n g p r o c e s s f o r t h e m a n u f a c t u r e a n d s u p p l y o f q u a l i t y p r o d u c t s t o i ts c u s t o m e r s .

13. P A R T I C U L A R S O F E M P L O Y E E S I N T E R M S O F S E C T I O N 2 1 7 ( 2 A ) O F THE C O M P A N I E S ACT. 1956.

N a m e Q u a l i f i c a t i o n D a t e o f B i r t h D e s i g n a t i o n D a t e o f c o m m e n c e m e n t E x p e r i e n c e ( y e a r s ) G r o s s r e m u n e r a t i o n ( R s . )

M r . M u k a n d Lai D u a B . S c .

0 8 . 0 1 . 1 9 4 9 W h o l e T i m e D i r e c t o r 0 1 . 0 4 . 9 4 35 6 0 , 3 9 , 5 0 0 / -

N a m e Q u a l i f i c a t i o n D a t e o f B i r t h D e s i g n a t i o n D a t e o f c o m m e n c e m e n t E x p e r i e n c e ( y e a r s ) G r o s s r e m u n e r a t i o n ( R s . )

Mr. R a m e s h K u m a r Dua B . C o m , LPRI ( L o n d o n ) 2 4 . 0 3 . 1 9 5 4 M a n a g i n g D i r e c t o r 0 1 . 0 4 . 9 4 3 2 6 0 , 3 9 , 5 0 0 / -

N O T E S

1 . R e m u n e r a t i o n i n c l u d e s s a l a r y a n d t a x a b l e p e r q u i s i t e s . 2 . R e m u n e r a t i o n t o W h o l e T i m e D i r e c t o r a n d M a n a g i n g D i r e c t o r i s a s p e r t h e p r o v i s i o n s o f

S e c t i o n s 198, 309 a n d S c h e d u l e X I I I o f t h e C o m p a n i e s A c t , 1956 . 3 . M r . M u k a n d Lai D u a , W h o l e T i m e D i r e c t o r i s t h e r e l a t i v e o f M r . R a m e s h K u m a r D u a ,

M a n a g i n g D i r e c t o r o f t h e C o m p a n y . 4 . N a t u r e o f e m p l o y m e n t i s c o n t r a c t u a l .

14. A C K N O W L E D G E M E N T T h e B o a r d o f D i r e c t o r s w o u l d l i ke t o t h a n k t h e C o m p a n y ' s S h a r e h o l d e r s , E m p l o y e e s a n d B a n k e r s f o r t h e i r c o n t i n u e d s u p p o r t a n d h e l p a n d w i s h t h a t t h e s a m e c o n t i n u e s i n t h e t i m e s t o c o m e .

For a n d o n b e h a l f o f t h e B o a r d o f D i r e c t o r s

P l a c e : De lh i D a t e : J u l y 3 1 , 2 0 0 7

( R A M E S H K U M A R D U A ) M a n a g i n g D i r e c t o r

( M U K A N D L A L D U A ) C h a i r m a n

5

U T J T r x n J T J T J T - T i r L r L r "

Corporate Governance

PHILOSOPHY C o r p o r a t e G o v e r n a n c e has o c c u p i e d p ivo ta l pos i t ion a t Re laxo F o o t w e a r s L im i ted s ince i n c e p t i o n . T h e bus iness h a s , s ince t h e n , been c o n d u c t e d i n t h e mos t t r a n s p a r e n t a n d e th i ca l manne r . Al l t h e necessa ry s teps h a v e b e e n t a k e n , w i t h t h e c h a n g i n g s o c i o - e c o n o m i c s c e n a r i o , t o e n s u r e t h a t t h e c o n d u c t o f bus iness i s as per t h e po l ic ies o f t h e M a n a g e m e n t , n a m e l y , " h o n e s t y , t r a n s p a r e n c y a n d e th ica l b e h a v i o u r " . T h e C o m p a n y ' s Po l ic ies a n d p rac t i ces a re a i m e d a t e f f i c ien t c o n d u c t o f bus iness a n d in s incere ly a n d e f fec t i ve ly m e e t i n g its o b l i g a t i o n s t o w a r d s its s t a k e h o l d e r s t h r o u g h an e f fec t i ve a n d p ro fess iona l B o a r d o f D i rec to rs , c o m p l e t e a n d t i m e l y d i s s e m i n a t i o n o f i n f o r m a t i o n t h r o u g h t ime l y d i sc losu res a n d m a x i m i s a t i o n o f s h a r e h o l d e r s ' w e a l t h .

BOARD OF DIRECTORS T h e c o m p o s i t i o n o f t h e p resen t B o a r d o f D i rec tors o f t h e c o m p a n y i s in l ine w i t h C lause 49 o f t h e L is t ing A g r e e m e n t . I t has o n e M a n a g i n g Director , o n e W h o l e T i m e D i rec tor a n d four N o n - E x e c u t i v e D i rec to r s . T h e f o l l o w i n g t a b l e c lear ly ref lects t h e c o m p o s i t i o n :

C o m p o s i t i o n and C a t e g o r y o f D i rec tors C a t e g o r y N a m e o f D i rec to rs P r o m o t e r a n d Mr. R a m e s h K u m a r D u a , M a n a g i n g D i rec to r E x e c u t i v e D i rec to rs Mr. M u k a n d Lai D u a , W h o l e t i m e D i rec to r P r o m o t e r a n d Mr . N ikh i l D u a N o n - E x e c u t i v e D i rec to r I n d e p e n d e n t a n d Mr. G . C . Ras tog i N o n - E x e c u t i v e D i rec to rs Mr. S.K. Sapra

M r . V i v e k K u m a r

A t t e n d a n c e o f D i rec tors a t t h e M e e t i n g s o f B o a r d o f D i rec to rs he ld du r i ng t h e F inanc ia l Yea r 2 0 0 6 - 0 7 a n d a t t h e last A n n u a l G e n e r a l M e e t i n g ( A G M ) he ld o n S e p t e m b e r 2 1 , 2 0 0 6 i s d e t a i l e d h e r e u n d e r :

Deta i ls o f M e e t i n g s of B o a r d of D i rec to rs held d u r i n g t h e y e a r 2006-07 : Date No . o f D i r e c t o r s p r e s e n t 2 0 . 0 5 . 2 0 0 6 5 2 7 . 0 7 . 2 0 0 6 4 2 6 . 1 0 . 2 0 0 6 5 3 0 . 0 1 . 2 0 0 7 5

No. of Board A t t e n d a n c e in N u m b e r o f o t h e r N a m e o f D i r e c t o r M e e t i n g s A G M held o n C o m p a n i e s in w h i c h

a t t e n d e d 2 1 . 0 9 . 2 0 0 6 D i r e c t o r s h i p held Mr. R a m e s h K u m a r Dua 4 Present 2 Mr. M u k a n d Lai Dua 4 Present 2 Mr . N i kh i l D u a 4 Present -Mr. G.C. Rastogi 4 Present -Mr. S.K. Sapra 3 Present -Mr. V i v e k K u m a r Not a Director on

t h e d a t e o f A G M 1

6

Corporate Governance

C O M M I T T E E S OF BOARD OF DIRECTORS

A U D I T C O M M I T T E E T h e A u d i t C o m m i t t e e has b e e n c o n s t i t u t e d a s per s e c t i o n 2 9 2 A o f T h e C o m p a n i e s A c t , 1956 a n d t h e g u i d e l i n e s se t o u t i n t h e l ist ing A g r e e m e n t w i t h t h e S t o c k E x c h a n g e . T h e t e r m s o f r e f e r e n c e i n c l u d e :

O v e r s e e i n g t h e c o r r e c t n e s s a n d re l iabi l i ty o f t h e C o m p a n y ' s f i n a n c i a l r epo r t i ng p r o c e s s . R e v i e w i n g pe r iod i c f i n a n c i a l resu l ts a n d s t a t e m e n t s b e f o r e t h e y a re s u b m i t t e d t o t h e B o a r d . A p p r o v i n g i n te rna l aud i t p lans and i n te rna l con t r o l f u n c t i o n a n d r e v i e w i n g t h e e f f i cacy o f t h e

f u n c t i o n s . D iscuss ion a n d r e v i e w o f pe r iod i c A u d i t R e p o r t s . D iscuss ion w i t h ex te rna l A u d i t o r s a b o u t t h e s c o p e o f aud i t i nc lud ing t h e o b s e r v a t i o n s o f t h e

a u d i t o r s .

R e v i e w i n g t h e C o m p a n y ' s F i n a n c i a l a n d Risk M a n a g e m e n t po l i c ies .

T h e A u d i t C o m m i t t e e i s e m p o w e r e d , p u r s u a n t t o t h e t e r m o f r e f e r e n c e , t o :

I n v e s t i g a t e any ac t iv i ty w i t h i n its t e r m s o f r e f e r e n c e a n d to s e e k any i n f o r m a t i o n i t requ i res f r o m any e m p l o y e e .

O b t a i n lega l o r o t h e r i n d e p e n d e n t p r o f e s s i o n a l a d v i c e a n d to s e c u r e t h e a t t e n d a n c e o f o u t s i d e r s w i t h re levan t e x p e r i e n c e a n d e x p e r t i s e , w h i c h i s c o n s i d e r e d necessary .

M i n u t e s o f m e e t i n g s o f t h e A u d i t C o m m i t t e e a re c i r c u l a t e d t o m e m b e r s o f t h e C o m m i t t e e a n d t h e B o a r d o f D i rec to rs a p p r o v e s t h e s a m e a t the i r next m e e t i n g .

C O M P O S I T I O N A N D A T T E N D A N C E T h e f o l l o w i n g t a b l e s s u m m a r i s e t h e c o m p o s i t i o n a n d a t t e n d a n c e a t t h e m e e t i n g s o f t h e A u d i t C o m m i t t e e N a m e o f D i r e c t o r - m e m b e r C a p a c i t y C a t e g o r y Mr. G. C. Ras tog i Mr. S.K. Sapra Mr . N i kh i l D u a

C h a i r m a n I n d e p e n d e n t N o n - e x e c u t i v e D i rec to r M e m b e r I n d e p e n d e n t N o n - e x e c u t i v e D i rec to r M e m b e r P r o m o t e r N o n - e x e c u t i v e D i rec to r

D a t e o f m e e t i n g Mr. G. C. Rastog i Mr. S.K. Sapra Mr . N i k h i l D u a 2 0 . 0 5 . 2 0 0 6 YES YES YES 2 7 . 0 7 . 2 0 0 6 YES NO YES 2 6 . 1 0 . 2 0 0 6 YES YES YES 3 0 . 0 1 . 2 0 0 7 YES YES YES

M e m b e r s o f t h e A u d i t C o m m i t t e e h a v e requ is i te f i n a n c i a l a n d m a n a g e m e n t exper t i se a n d C o m p a n y S e c r e t a r y ac ts a s t h e S e c r e t a r y t o t h e C o m m i t t e e .

N o t e s o n D i rec tors r e t i r i n g / b e i n g a p p o i n t e d / r e - a p p o i n t e d

Mr. V i v e k Kumar Prof. V i v e k K u m a r i s a n E lec t r i ca l E n g i n e e r f r o m t h e Un ive rs i t y o f R o o r k e e ( n o w N T R o o r k e e ) a n d a n M B A f r o m Facu l ty o f M a n a g e m e n t S t u d i e s , Delh i Un ivers i t y . He has 16 y e a r s o f C o r p o r a t e e x p e r i e n c e in Ind ia 's l ead ing bus iness h o u s e s w h e r e he has b e e n o p e r a t i o n a l h e a d bes ides se t t i ng up a n u m b e r o f e lec t r i ca l a p p l i a n c e p l a n t s .

7

Lnj -uTjTJTjaruT -rLTLr

Corporate Governance

His con t r i bu t i on has been in t h e f o r m of i m p r o v e d product iv i ty , qua l i ty a n d ef f ic iency. He is a lso a m a n a g e m e n t c o n s u l t a n t to m a n y c o r p o r a t e s in India a n d a b r o a d in t h e a reas o f Qual i ty , Product iv i ty , E n v i r o n m e n t , Sa fe ty , e tc .

Prof. V i v e k K u m a r has b e e n a s s o c i a t e d w i t h a c a d e m i c s a n d spec ia l i zes i n t h e a r e a s o f O p e r a t i o n s M a n a g e m e n t , S u p p l y C h a i n M a n a g e m e n t , Qua l i t y M a n a g e m e n t a n d Pro jec t M a n a g e m e n t . P resen t l y he i s a S e n i o r P r o f e s s o r i n t h e O p e r a t i o n s A r e a a t F O R E S c h o o l o f M a n a g e m e n t , N e w D e l h i . H e has w i d e l y t r a v e l e d a b r o a d a n d has e x p o s u r e o f l ight e n g i n e e r i n g indus t ry i n F r a n c e , J a p a n , U S A , U K , Sri L a n k a , N e p a l , M e x i c o , I n d o n e s i a , T h a i l a n d , F i n l a n d , S w e d e n e tc . H e i s w e l l k n o w n i n t h e a p p l i a n c e indus t ry a n d a c a d e m i c c i rc les .

A t p resen t Prof . V i v e k K u m a r i s o n t h e b o a r d o f S a g a r Qua l i t y M a n a g e m e n t S e r v i c e s P r i va te L im i ted bes ides be ing a D i rec to r on t h e B o a r d o f t h e C o m p a n y .

Mr. S.K. Sapra

Mr. S .K . S a p r a isa F.C.A. w i t h o v e r 4 0 y e a r s o f e x p e r i e n c e as C h a r t e r e d A c c o u n t a n t o f r e p u t e .

SHAREHOLDERS' / INVESTORS' GRIEVANCE AND SHARE TRANSFER COMMITTEE C O M P O S I T I O N A N D A T T E N D A N C E Dur ing t h e f i n a n c i a l y e a r 2 0 0 6 - 0 7 , t h r e e m e e t i n g s o f t h e C o m m i t t e e w e r e held a n d t h e a t t e n d a n c e o f m e m b e r s a t t h e m e e t i n g w a s a s f o l l o w s : N a m e o f t h e M e m b e r N o . o f M e e t i n g s a t t e n d e d Mr. G.C. Ras tog i , Cha i rman 03 Mr. R a m e s h K u m a r Dua 03 Mr. M u k a n d Lai Dua 03

Al l c o m p l a i n t s , s u g g e s t i o n s a n d g r i e v a n c e s a re p r o m p t l y dea l t w i t h a n d reso l ved w i t h i n 1 5 d a y s un less t h e r e i s a d i s p u t e a n d / o r o t h e r legal c o n s t r a i n t .

C o m p l a i n t s / q u e r i e s g e n e r a l l y re la ted t o , in te r -a l ia , n o n - r e c e i p t o f d i v i d e n d , c o p i e s o f A n n u a l R e p o r t , spl i t s h a r e s & t r a n s f e r o f s h a r e s , e tc . w e r e du ly a t t e n d e d a n d t h e C o m p a n y has f u r n i s h e d n e c e s s a r y d o c u m e n t s / i n f o r m a t i o n t o t h e s h a r e h o l d e r s p romp t l y .

T h e C o m m i t t e e s u p e r v i s e s t h e m e c h a n i s m for red ressa l o f i nves to r g r i e v a n c e s a n d e n s u r e s co rd i a l i nves to r re la t i ons a p a r t f r o m look ing in to redressa l o f s h a r e h o l d e r s ' a n d i nves to rs ' c o m p l a i n t s l ike t r a n s f e r o f s h a r e s , non rece ip t o f A n n u a l R e p o r t s , non rece ip t o f d i v i d e n d a n d a l l ied m a t t e r s . T h e C o m m i t t e e p e r f o r m s t h e f o l l o w i n g f u n c t i o n s :

T r a n s f e r / t r a n s m i s s i o n of s h a r e s . S p l i t - u p / s u b - d i v i s i o n a n d c o n s o l i d a t i o n o f s h a r e s . Issue o f n e w a n d d u p l i c a t e s h a r e ce r t i f i ca tes . R e g i s t r a t i o n o f P o w e r o f A t t o r n e y s , P r o b a t e s , Le t te rs o f t r a n s m i s s i o n o r o the r d o c u m e n t s . To o p e n / c l o s e b a n k a c c o u n t ( s ) o f t h e C o m p a n y for r e m i t t a n c e o f d i v i d e n d a n d issue i ns t r uc t i ons t o b a n k

f r o m t i m e t o t i m e i n th is r e g a r d . To look in to t h e red ressa l o f s h a r e h o l d e r s ' c o m p l a i n t s a n d e n q u i r i e s . A n y a l l i e d m a t t e r s ou t o f a n d i nc i den ta l to t h e s e f u n c t i o n s .

No r e q u e s t s for s h a r e t r ans fe r s a re p e n d i n g e x c e p t t h o s e t h a t a re d i s p u t e d o r s u b - j u d i c e .

8

Corporate Governance

Mr. S a n d e e p C h a n d n a , C o m p a n y S e c r e t a r y i s t h e c o m p l i a n c e o f f i ce r o f t h e C o m p a n y .

R E M U N E R A T I O N POLICY T h e r e m u n e r a t i o n po l icy o f t h e C o m p a n y i s d i r e c t e d t o w a r d s r e w a r d i n g p e r f o r m a n c e , b a s e d o n p e r i o d i c r e v i e w o f p e r f o r m a n c e s a n d a c h i e v e m e n t s a n d i s p r imar i l y b a s e d on t h e f o l l o w i n g cr i te r ia :

P e r f o r m a n c e o f t h e C o m p a n y , its d i v i s i ons a n d un i t s . T rack r e c o r d , p o t e n t i a l , p e r s o n a l a t t i t u d e & p e r f o r m a n c e o f i n d i v i d u a l ' m a n a g e r a n d e x t e r n a l c o m p e t i t i v e

e n v i r o n m e n t .

T h e r e m u n e r a t i o n po l icy o f t h e C o m p a n y i s i n l ine w i t h t h e I ndus t r y ' s p r a c t i c e . T h e r e m u n e r a t i o n po l icy i s d e c i d e d b y t h e R e m u n e r a t i o n C o m m i t t e e c o m p r i s i n g o f I n d e p e n d e n t D i r e c t o r s .

1 . R e m u n e r a t i o n o f E x e c u t i v e D i r e c t o r s - T h e M a n a g i n g D i r e c t o r a n d t h e W h o l e T i m e D i r e c t o r a r e pa id r e m u n e r a t i o n a s per t h e t e r m s a p p r o v e d b y t h e B o a r d o f D i r e c t o r s o f t h e C o m p a n y a n d c o n f i r m e d b y t h e s h a r e h o l d e r s o f t h e c o m p a n y a n d s u b j e c t t o s u c h o t h e r s t a t u t o r y a p p r o v a l s a s m a y b e n e c e s s a r y .

N a m e o f D i rec to rs D e s i g n a t i o n Sa lary Perks C o m m i s s i o n Tota l (Rs.) (Rs.) (Rs.) (Rs.)

Mr. Ramesh Kumar Dua M a n a g i n g D i r ec to r 3 0 , 0 0 , 0 0 0 Nil 3 0 , 3 9 , 5 0 0 6 0 , 3 9 , 5 0 0 Mr. M u k a n d Lai D u a W h o l e T i m e D i rec to r 3 0 , 0 0 , 0 0 0 Nil 3 0 , 3 9 , 5 0 0 6 0 , 3 9 , 5 0 0

Mr. R a m e s h K u m a r D u a , M a n a g i n g D i rec to r a n d Mr . M u k a n d Lai D u a , W h o l e T i m e D i r e c t o r o f t h e C o m p a n y has b e e n a p p o i n t e d w i t h e f fec t f r o m 0 1 . 0 4 . 0 4 for a p e r i o d o f f i ve y e a r s . T h e n o t i c e p e r i o d i n bo th c a s e s i s 3 m o n t h s , h o w e v e r b o t h a r e no t e n t i t l e d fo r any k ind o f s e v e r a n c e f e e s f r o m t h e C o m p a n y .

2 . R e m u n e r a t i o n of N o n - E x e c u t i v e D i r e c t o r s - Detai ls o f r e m u n e r a t i o n paid to t h e N o n - Execu t i ve D i rec to r s fo r F i n a n c i a l Y e a r 2 0 0 6 - 2 0 0 7 i s a s f o l l o w s :

N a m e o f t h e D i rec to rs S i t t i ng fees (Rs.)

Mr. G.C. Ras tog i 1 4 , 0 0 0 . 0 0 Mr. S.K. Sapra 9 , 0 0 0 . 0 0

A N N U A L G E N E R A L M E E T I N G S

Deta i ls o f last t h r e e A n n u a l G e n e r a l m e e t i n g s are : P a r t i c u l a r s F.Y 2 0 0 3 - 0 4 F.Y. 2 0 0 4 - 0 5 F.Y. 2 0 0 5 - 0 6 D a y F r iday T h u r s d a y T h u r s d a y D a t e 2 4 . 0 9 . 2 0 0 4 2 2 . 0 9 . 2 0 0 5 2 1 . 0 9 . 2 0 0 6 T i m e 10.30 A . M . 10 .30 A . M . 1 0 . 3 0 A . M . V e n u e Sri Sa tya Sai In ternat iona l Sri Satya Sai Internat ional Sri Satya Sai In ternat ional

C e n t r e s Schoo l C e n t r e & S c h o o l C e n t r e s S c h o o l Lodh i R o a d I n s t i t u t i o n a l A r e a , Lodh i R o a d I n s t i t u t i o n a l A r e a , Lodh i R o a d I n s t i t u t i o n a l A r e a , Lodhi R o a d , Praga t i Vihar, Lodhi R o a d , Praga t i Vihar, Lodh i R o a d , P r a g a t i V iha r , N e w D e l h i - 1 1 0 0 0 3 N e w D e l h i - 1 1 0 0 0 3 N e w Delh i - 1 1 0 0 0 3

9

L T L T L T i r i / \ r L n j " u ~ L r L r '

Corporate Governance

DISCLOSURES (i) D i sc losu re on t h e mate r ia l l y s i gn i f i can t re la ted par ty t r a n s a c t i o n i.e. t r a n s a c t i o n s o f t h e C o m p a n y o f

ma te r i a l n a t u r e , w i t h its P r o m o t e r s , D i rec to rs o r t h e M a n a g e m e n t , t he i r subs i d i a r i es o r re la t i ves e t c . t h a t may h a v e p o t e n t i a l con f l i c t w i t h t h e in te res ts o f t h e C o m p a n y a t l a rge : No s u c h t r a n s a c t i o n has b e e n e n t e r e d in to d u r i n g t h e year . A l l r e la ted par ty t r a n s a c t i o n s h a v e b e e n r e p o r t e d a n d f o r m par t o f t h e N o t e s t o A c c o u n t s S e c t i o n o f t h e B a l a n c e S h e e t .

(ii) De ta i l s o f n o n - c o m p l i a n c e by t h e C o m p a n y , p e n a l t i e s , s t r i c tu res i m p o s e d on t h e C o m p a n y by S t o c k Exchanges o r SEBI o r any s t a t u t o r y au tho r i t y , on any m a t t e r re la ted to cap i t a l m a r k e t s d u r i n g t h e last t h r e e y e a r s : Dur ing t h e last t h r e e y e a r s , n o pena l t i es o r s t r i c tu res h a v e b e e n i m p o s e d o n t h e C o m p a n y b y t h e S t o c k E x c h a n g e s o r S E B I o r a n y o t h e r s t a tu to r y a u t h o r i t i e s o n m a t t e r s re la ted t o c a p i t a l m a r k e t s .

M E A N S O F C O M M U N I C A T I O N

Hal f - year l y resu l ts repor t sen t to e a c h h o u s e h o l d o f S h a r e h o l d e r s :

Q u a r t e r l y Resu l ts :

N o , but p u b l i s h e d (in t h e Eng l i sh l a n g u a g e ) i n F i n a n c i a l E x p r e s s / E c o n o m i c T i m e s a n d (in t h e Hind i L a n g u a g e ) i n J a n s a t t t a / N a v b h a r a t T i m e s , D e l h i .

P u b l i s h e d (in t h e Eng l i sh l a n g u a g e ) i n F i n a n c i a l E x p r e s s / E c o n o m i c T i m e s a n d (in t h e H ind i L a n g u a g e ) i n J a n s a t t a / N a v b h a r a t T i m e s , D e l h i .

W e b s i t e s w h e r e qua r t e r l y resu l ts a re d i s p l a y e d : w w w . r e l a x o f o o t w e a r . c o m

W h e t h e r i t a lso d i s p l a y s o f f ic ia l n e w s r e l e a s e s : No

A n y p r e s e n t a t i o n s m a d e t o t h e Ins t i t u t i ona l I nves to r s o r t o t h e A n a l y s t s : No

Bes ides d i sp lay o f q u a r t e r l y f i n a n c i a l resul ts o n t h e w e b s i t e o f t h e c o m p a n y , w w w . r e l a x o f o o t w e a r . c o m , t h e s a m e are a lso p o s t e d o n t h e E lec t r on i c Da ta I n f o r m a t i o n f i l ing a n d Re t r i eva l w e b s i t e n a m e l y w w w . s e b i e d i f a r . n i c . i n . T h e w e b s i t e i s a lso a c c e s s i b l e t h r o u g h a Hype r l i n k 'EDIFAR' f r o m SEBI's o f f i c i a l w e b s i t e w w w . s e b i . g o v . i n

G E N E R A L S H A R E H O L D E R S INFORMATION

A n n u a l G e n e r a l m e e t i n g D a t e a n d T i m e -V e n u e -

M o n d a y . 2 4 t h S e p t e m b e r , 2 0 0 7 a t 10.30 a . m . Sri S a t h y a Sa i I n t e r n a t i o n a l C e n t r e , I ns t i t u t i ona l A r e a , P r a g a t i V iha r , Lodh i R o a d , N e w D e l h i - 1 1 0 0 0 3 .

Financ ia l C a l e n d a r ( T e n t a t i v e ) : M e e t i n g o f t h e B o a r d / C o m m i t t e e o f D i rectors to cons ide r f i nanc ia l resul ts . - For t h e q u a r t e r e n d i n g J u n e 3 0 , 2 0 0 7 - For t h e q u a r t e r e n d i n g S e p t . 3 0 , 2 0 0 7 - For t h e q u a r t e r e n d i n g Dec . 3 1 , 2007 - A u d i t e d A n n u a l Resu l t s for 2 0 0 7 - 0 8 - A n n u a l G e n e r a l M e e t i n g for 2 0 0 7 - 0 8

Book C losure Dates

E n d - J u l y , 2007 E n d - O c t o b e r , 2007 E n d - J a n u a r y , 2008 E n d J u n e , 2 0 0 8 M i d - S e p t , 2 0 0 8

Tuesday , 18th S e p t e m b e r , 2 0 0 7 t o M o n d a y , 2 4 t h S e p t e m b e r , 2 0 0 7 ( B o t h d a y s inc lus ive )

10

Corporate Governance

D i v i d e n d P a y m e n t Da te

R e g i s t e r e d Of f ice

3rd w e e k o f O c t o b e r 2007 (Tenta t ive)

3 1 6 - 3 1 9 , A l l i ed H o u s e I nde r Lok, D e l h i - 3 5 . , Te l . 2 3 6 5 8 3 5 4 , 2 3 6 5 8 3 6 5 Fax . 9 1 - 1 1 - 2 3 6 5 8 4 3 1 , 2 3 6 5 8 7 7 3 E-mai l : s a n d e e p c h a n d n a @ . r e l a x o f o o t w e a r . c o m

7.

8.

List ing on Stock E x c h a n g e

S tock C o d e B o m b a y S t o c k E x c h a n g e

B o m b a y S t o c k E x c h a n g e L i m i t e d , Ph i roze J e e J e e Bhoy Towers , Da la i S t r e e t , M u m b a i - 4 0 0 001

5 3 0 5 1 7

S t o c k M a r k e t Data Table s h o w i n g m o n t h l y pr ice m o v e m e n t d u r i n g t h e f i n a n c i a l y e a r 2006 -07 .

M o n t h & H i g h L o w C l o s e M k t Y e a r Rs . Rs . Rs . C a p .

Apr , 06 4 1 . 8 0 3 4 . 6 5 3 7 . 1 0 4 4 . 5 2 M a y , 06 4 0 . 2 5 2 8 . 0 5 3 4 . 5 0 4 1 . 4 0 J u n e , 06 3 3 . 6 5 2 3 . 3 5 2 9 . 6 0 3 5 . 5 2 July, 06 3 0 . 8 5 2 5 . 0 0 2 6 . 8 5 3 2 . 2 2 A u g , 06 3 7 . 7 0 2 6 . 4 5 3 2 . 6 5 3 9 . 1 8 Sep t , 06 3 6 . 0 5 2 9 . 0 5 3 6 . 0 5 4 3 . 2 6 O c t , 06 3 8 . 4 5 3 1 . 0 0 3 1 . 7 0 3 8 . 0 4 N o v , 06 3 9 . 9 5 2 8 . 0 0 3 6 . 8 5 4 4 . 2 2 D e c , 06 5 4 . 4 0 3 0 . 3 5 4 3 . 2 5 5 1 . 9 0 Jan , 07 4 7 . 9 0 4 0 . 0 0 4 0 . 2 0 4 8 . 2 4 Feb, 07 4 3 . 9 0 3 2 . 4 5 3 4 . 1 5 4 0 . 9 8 Mar , 07 3 7 . 6 0 3 0 . 3 0 3 3 . 3 5 4 0 . 0 2

9 . Reg is t ra rs and Transfer A g e n t s K a r v y C o m p u t e r s h a r e P v t . L t d . U n i t : R e l a x o F o o t w e a r s L im i t ed 4 6 , A v e n u e 4 , S t r e e t N o . 1 , B a n j a r a Hi l ls , H y d e r a b a d - 5 0 0 0 3 4

10. S h a r e Transfer S y s t e m : T h e C o m p a n y has a p p o i n t e d M/s K a r v y C o m p u t e r s h a r e P v t . L t d . a s S h a r e T rans fe r A g e n t bo th for P h y s i c a l & E l e c t r o n i c t r a n s f e r o f s h a r e s . A l l r e q u e s t s fo r t r a n s f e r o f s h a r e s , i f f o u n d in o rder , a re p r o c e s s e d w i t h i n a p e r i o d o f 1 4 d a y s f r o m t h e d a t e o f rece ip t .

11

u T J T J T j a r L n r u ~ u - \ r i r

Corporate Governance

1 1 (a) D i s t r i b u t i o n o f s h a r e h o l d i n g s a s o n 3 1 s ' M a r c h , 2007

S I . No. C a t e g o r y N o . of % of N o . of % of A m o u n t From To S h a r e h o l d e r s S h a r e h o l d e r s S h a r e h o l d e r s

1. 0 0 0 1 5 0 0 0 2 2 0 2 9 3 . 5 0 5 0 9 7 7 1 4 . 2 5 2. 5 0 0 1 - 1 0 0 0 0 68 2 .89 1 0 5 0 6 0 0.88 3. 1 0 0 0 1 - 2 0 0 0 0 4 2 1.78 1 2 5 1 3 1 1.05 4. 2 0 0 0 1 - 3 0 0 0 0 8 0.34 4 0 0 2 3 0.33 5. 3 0 0 0 1 - 4 0 0 0 0 7 0.30 4 9 9 4 4 0.41 6. 4 0 0 0 1 5 0 0 0 0 3 0.13 2 8 4 8 9 0.23 7. 5 0 0 0 1 - 1 0 0 0 0 0 9 0.38 1 2 7 7 8 3 1.06 8. 1 0 0 0 0 1 & A b o v e 16 0.68 1 1 0 1 4 9 9 9 9 1 . 7 9

TOTAL 2 3 5 5 1 0 0 . 0 0 1 2 0 0 1 2 0 0 1 0 0 . 0 0

(b) C a t e g o r i e s o f S h a r e h o l d i n g a s o n 3 1 s t M a r c h , 2007 C a t e g o r y No. of S h a r e h o l d e r s H o l d i n g % T o Equ i ty BODIES CORPORATES 95 2 1 2 5 3 5 9 17.71 RESIDENT INDIVIDUALS 2 2 1 7 9 8 3 3 5 9 4 8 1 . 9 3 HUF 31 3 9 0 4 1 0.33 CLEARING MEMBERS 7 2 3 6 6 0.02 NON RESIDENT INDIANS 5 8 4 0 0.01 TOTAL 2 3 5 5 1 2 0 0 1 2 0 0 1 0 0 . 0 0

12. D e m a t e r i a l i s a t i o n of S h a r e s T h e C o m p a n y i s o f f e r i ng t r a n s f e r c u m d e m a t e r i a l i s a t i o n fac i l i t y t o s h a r e h o l d e r s w i t h e f f ec t f r o m M a y 8 , 2 0 0 0 .

A s o n 31s t M a r c h , 2 0 0 7 o u t o f t o t a l 120 .01 Lacs e q u i t y s h a r e s 27 .47 Lacs e q u i t y s h a r e s r e p r e s e n t i n g 2 2 . 8 9 % o f t h e t o t a l pa i d u p e q u i t y c a p i t a l h a v e b e e n d e m a t e r i a l i s e d .

T h e t r a n s f e r c u m d e m a t fac i l i t y i s a v a i l a b l e t o all s h a r e h o l d e r s o f t h e C o m p a n y w h o r e q u e s t fo r s u c h fac i l i t y . O n c o m p l e t i o n o f t h e p r o c e s s o f r e g i s t r a t i o n o f s h a r e s s u b m i t t e d for t r ans fe r , t h e C o m p a n y i n t i m a t e s t h e s h a r e h o l d e r s p r o v i d i n g a n o p t i o n le t te r t o d e m a t e r i a l i s e s u c h s h a r e s . U p o n rece ip t o f t h e le t te r f r o m t h e s h a r e h o l d e r s , w i t h i n t h e p r e s c r i b e d t i m e l imit m e n t i o n e d i n t h e o p t i o n letter, t h e C o m p a n y c o m p l e t e s t h e d e m a t e r i a l i s a t i o n o f s h a r e s a f te r t r a n s f e r i n t h e n a m e o f s h a r e h o l d e r s .

13. I n v e s t o r c o r r e s p o n d e n c e Al l e n q u i r i e s , c l a r i f i c a t i o n s a n d c o r r e s p o n d e n c e s h o u l d b e a d d r e s s e d t o t h e c o m p l i a n c e o f f i ce r a t t h e f o l l o w i n g a d d r e s s :

C o m p l i a n c e O f f i ce r S a n d e e p C h a n d n a , C o m p a n y Sec re ta ry , Re laxo F o o t w e a r s L i m i t e d , 3 1 6 - 3 1 9 , A l l i e d H o u s e , I n d e r l o k C h o w k , De lh i - 1 1 0 0 3 5 .

12

Corporate Governance

14. Per S h a r e Data :

PARTICULARS 2 0 0 6 - 0 7 2 0 0 5 - 0 6 2 0 0 4 - 0 5 2 0 0 3 - 0 4 2 0 0 2 - 0 3 2 0 0 1 - 0 2 2 0 0 0 - 0 1 Net Earnings (Rs. Lacs) 6 5 9 . 5 6 3 2 5 . 8 5 372 .31 540 .37 349 .01 4 0 6 . 6 0 6 8 5 . 8 3 Cash Earnings (Rs. Lacs) 1952 .72 1190 .85 1161 .12 1015 .04 764 .90 822 .27 8 3 2 . 0 4 E.P.S. 5.50 2 .72 3.10 4 .50 2.91 3.39 9.35 C.E.P.S. 16.27 9.92 9.67 8.46 6.37 6.85 11.34 D i v i dend per s h a r e (Rs.) 0 .75 0.75 0.75 0.75 0.75 0.75 0.75 D i v i d e n d pay ou t ( %) 13.63 27 .57 24 .19 16.66 25 .79 2 2 . 3 4 13.13 B o o k v a l u e per s h a r e 4 2 . 7 6 38 .30 36 .15 33 .80 30 .09 28 .08 2 7 . 1 4 Face va lue pershare(Rs) 5.00 5.00 5.00 5.00 5.00 5.00 5.00

15. Transfer of u n c l a i m e d a m o u n t s to Inves tor E d u c a t i o n and P r o t e c t i o n Fund : T h e inves to rs a re a d v i s e d t o c l a i m t h e d i v i d e n d s ly ing i n t h e u n p a i d d i v i d e n d a c c o u n t s o f t h e c o m p a n y be fo re t h e d u e d a t e ( as i n d i c a t e d i n t h e no tes to t h e no t ice) for c red i t i ng t h e s a m e by t h e c o m p a n y to t h e Inves to r E d u c a t i o n a n d P r o t e c t i o n F u n d .

Dur ing t h e y e a r u n d e r r e v i e w t h e C o m p a n y has c red i t ed a s u m o f Rs .34 ,770 t o t h e Inves to r E d u c a t i o n a n d P r o t e c t i o n F u n d p u r s u a n t t o S e c t i o n 2 0 5 C o f t h e C o m p a n i e s A c t , 1956 a n d t h e Inves to r E d u c a t i o n a n d P r o t e c t i o n Fund ( A w a r e n e s s a n d P r o t e c t i o n o f Inves to r ) R u l e s , 2 0 0 1 i n respec t o f u n p a i d d i v i d e n d o f y e a r e n d i n g on 3 1 . 0 3 . 1 9 9 9 .

16. O t h e r usefu l i n f o r m a t i o n for s h a r e h o l d e r s : 16.1 M e m b e r s a re a d v i s e d t h a t d i v i d e n d s for t h e f i n a n c i a l y e a r e n d e d 31st M a r c h , 2000 o n w a r d s

w h i c h r e m a i n u n p a i d / u n c l a i m e d ove r a pe r iod o f 7 y e a r s h a v e to be t r a n s f e r r e d by t h e C o m p a n y to Inves to r E d u c a t i o n & P r o t e c t i o n Fund ( I E P F ) c o n s t i t u t e d by t h e Cen t ra l G o v e r n m e n t u n d e r S e c t i o n 2 0 5 A & 2 0 5 C o f t h e C o m p a n i e s A c t , 1956 ( the A c t ) . S h a r e h o l d e r s w h o h a v e not c l a i m e d d i v i d e n d for t h i s pe r i od a re r e q u e s t e d t o l o d g e the i r c l a i m w i t h t h e C o m p a n y , a s u n d e r t h e a m e n d e d p rov i s ions o f S e c t i o n 2 0 5 B o f t h e A c t , no c l a i m shal l lie fo r t h e u n c l a i m e d d i v i d e n d s f r o m IEPF by t h e m e m b e r s .

16.2 Equ i ty sha res o f t h e C o m p a n y a re u n d e r c o m p u l s o r y d e m a t t r a d i n g w.e. f . 31st M a y , 2 0 0 1 , C o n s i d e r i n g t h e a d v a n t a g e s o f scr ip less t r a d i n g , s h a r e h o l d e r s a re r e q u e s t e d t o c o n s i d e r d e m a t e r i a l i s t i o n o f t he i r s h a r e h o l d i n g so as t o a v o i d i n c o n v e n i e n c e i n f u t u r e .

16.3 M e m b e r s / B e n e f i c i a l o w n e r s a re r e q u e s t e d to q u o t e the i r Fol io N o . / D.P. & c l ient ID N o s . as t h e c a s e m a y be , i n all c o r r e s p o n d e n c e w i t h t h e C o m p a n y .

16.4 Bene f i c i a l o w n e r s o f s h a r e s in d e m a t f o r m a re a d v i s e d t h a t i n t e r m s o f t h e r e g u l a t i o n s o f N S D L & C D S L , the i r B a n k A c c o u n t d e t a i l s , a s f u r n i s h e d t o t h e Depos i t o r y p a r t i c i p a n t s (DP) w i l l b e p r i n ted o n the i r D i v i dend W a r r a n t s . T h e c o m p a n y w i l l not e n t e r t a i n r eques t s for c h a n g e o f s u c h b a n k de ta i l s p r in ted on the i r d i v i d e n d w a r r a n t s .

16.5 M e m b e r s ho ld i ng s h a r e s i n phys ica l f o r m are r e q u e s t e d to not i fy t o t h e C o m p a n y , c h a n g e i n the i r a d d r e s s / P i n C o d e n u m b e r a n d B a n k a c c o u n t de ta i l s p romp t l y .

16.6 Bene f i c i a l o w n e r s o f s h a r e s i n d e m a t f o r m are r e q u e s t e d to s e n d the i r i ns t ruc t i ons r e g a r d i n g c h a n g e o f a d d r e s s , b a n k d e t a i l s , n o m i n a t i o n , p o w e r o f a t t o r n e y e tc . d i rect ly t o the i r DP as t h e s a m e a r e m a i n t a i n e d b y t h e m .

13

L T L n J T J T J T J T J T J T X L T L r '

Corporate Governance

16.7 S e c t i o n 109A o f t h e C o m p a n i e s ac t , 1956 e x t e n d s n o m i n a t i o n fac i l i t y t o i nd i v i dua l s ho ld i ng s h a r e s in phys ica l f o r m in c o m p a n i e s . M e m b e r s , i n pa r t i cu la r t h o s e ho ld i ng s h a r e s in s ing le n a m e , m a y ava i l o f t h e a b o v e fac i l i ty by f u r n i s h i n g t h e pa r t i cu la rs o f the i r n o m i n a t i o n i n t h e p resc r i bed N o m i n a t i o n F o r m .

Auditors' Certificate on Corporate Governance TO THE MEMBERS OF RE LAX O FOOTWEARS LIMITED

W e h a v e e x a m i n e d t h e c o m p l i a n c e o f c o n d i t i o n s o f C o r p o r a t e G o v e r n a n c e b y R E L A X O F O O T W E A R S LTD. , fo r t h e y e a r e n d e d on 31 s t M a r c h , 2 0 0 7 , as s t i p u l a t e d i n C l a u s e 49 o f t h e List ing A g r e e m e n t o f t h e sa id C o m p a n y w i t h t h e S t o c k E x c h a n g e s i n Ind ia .

T h e c o m p l i a n c e o f t h e c o n d i t i o n s o f C o r p o r a t e G o v e r n a n c e i s t h e respons ib i l i t y o f t h e M a n a g e m e n t . O u r e x a m i n a t i o n w a s l im i ted t o p r o c e d u r e s a n d i m p l e m e n t a t i o n t he reo f , a d o p t e d b y t h e C o m p a n y for e n s u r i n g t h e c o m p l i a n c e o f t h e c o n d i t i o n s o f t h e C o r p o r a t e G o v e r n a n c e . I t i s ne i the r an a u d i t nor a n exp ress ion o f o p i n i o n o n t h e f i n a n c i a l s t a t e m e n t s o f t h e C o m p a n y .

I n our o p i n i o n a n d t o t h e best o f our i n f o r m a t i o n a n d a c c o r d i n g t o t h e e x p l a n a t i o n s g i v e n t o us , we cer t i fy t h a t t h e C o m p a n y has c o m p l i e d w i t h t h e c o n d i t i o n s o f C o r p o r a t e G o v e r n a n c e a s s t i p u l a t e d i n t h e a b o v e m e n t i o n e d List ing A g r e e m e n t excep t t h e c o n d i t i o n r e g a r d i n g t h e c o m p o s i t i o n o f B o a r d d u r i n g t h e f i rst t h r e e q u a r t e r s o f t h e F inanc ia l Y e a r e n d e d o n 31st M a r c h , 2 0 0 7 . F r o m t h e Fou r th Q u a r t e r o n w a r d s , t h e c o m p o s i t i o n o f t h e B o a r d o f D i rec to rs i s i n a c c o r d a n c e w i t h t h e p rov i s i ons o f c l a u s e 4 9 o f t h e List ing A g r e e m e n t .

We s ta te t h a t no i nves to r g r i e v a n c e i s p e n d i n g for a pe r iod e x c e e d i n g o n e m o n t h a g a i n s t t h e C o m p a n y a s per t h e reco rds m a i n t a i n e d b y S h a r e h o l d e r s ' G r i e v a n c e C o m m i t t e e .

W e f u r t he r s t a t e t h a t s u c h c o m p l i a n c e i s ne i the r a n a s s u r a n c e a s t o f u t u r e v iab i l i t y o f t h e C o m p a n y nor t h e e f f i c iency o r t h e e f f e c t i v e n e s s w i t h w h i c h t h e M a n a g e m e n t has c o n d u c t e d t h e a f fa i rs o f t h e C o m p a n y .

FOR GUPTA & J H U N J H U N W A L A C h a r t e r e d A c c o u n t a n t s

P l a c e : Delhi Date : Ju ly 3 1 , 2007 C . A . M U K E S H D U A

Par tner ( M . N o . 8 5 3 2 3 )

14

Auditors' Report

TO THE MEMBERS OF RELAXO FOOTWEARS LTD.

We have audi ted the at tached Balance Sheet of R E L A X O F O O T W E A R S L IM ITED as at 31 st March , 2007 and also the Profit and Loss a c c o u n t for t he yea r ended on tha t da te annexed the re to and Cash F low S t a t e m e n t for t h e year e n d e d on tha t d a t e . These f inanc ia l s t a temen ts are t h e responsibi l i ty o f t he C o m p a n y ' s M a n a g e m e n t . Our responsibi l i ty is to express an op in ion on t hese f inanc ia l s ta temen ts based on ou raud i t .

1 . We conduc ted our audi t in a c c o r d a n c e w i t h aud i t ing s tanda rds genera l ly a c c e p t e d in India. Those s tanda rds require tha t we plan and pe r fo rm t h e aud i t t o ob ta in reasonab le assu rance a b o u t w h e t h e r t h e f inanc ia l s t a temen ts a re f ree o f mater ia l m iss ta temen t . An audi t inc ludes exam in ing , on a tes t basis, ev idence suppor t i ng the a m o u n t s and d isc losures in f inanc ia l s t a temen ts . An aud i t also inc ludes assessing t h e accoun t i ng pr inciples used and s ign i f icant es t imates m a d e by the M a n a g e m e n t , as we l l as eva lua t ing the overa l l f inanc ia l s t a temen t p resen ta t i on . We bel ieve tha t our audi t prov ides a reasonab le basis for our o p i n i o n .

2 . As required by the C o m p a n i e s (Aud i tors ' Report ) Order, 2003 (as a m e n d e d ) issued by the Cent ra l G o v e r n m e n t o f India in t e rms of sub sec t ion (4A) of sect ion 227 of t h e C o m p a n i e s Ac t , 1956. We enc lose in t h e A n n e x u r e hereto a s t a t e m e n t on t h e mat ters speci f ied in pa rag raphs 4 and 5 of t h e said Order.

3 . Further to our c o m m e n t s in t h e annexure referred to in pa rag raph 2 a b o v e , we report t h a t : (a) We have ob ta ined all t h e in fo rmat ion and exp lanat ions w h i c h to the best o f our k n o w l e d g e and belief w e r e

n e c e s s a r y f o r t h e purposes o f o u r a u d i t ; (b) In our o p i n i o n , proper books of a c c o u n t as required by law have been kept by the C o m p a n y so far as i t appea rs

f r om o u r e x a m i n a t i o n of such books ; (c) The Ba lance S h e e t , Profi t and Loss A c c o u n t and Cash F low S t a t e m e n t dea l t w i t h by th is report are in a g r e e m e n t

w i t h the books o f a c c o u n t ; (d) In our op in ion t h e Ba lance S h e e t , Prof i t & Loss A c c o u n t and Cash F low S t a t e m e n t dea l t w i t h by th is report comp ly

w i t h t h e manda to ry A c c o u n t i n g S tanda rds referred in sub-sec t ion (3C) o f sect ion 211 o f t h e C o m p a n i e s Ac t , 1956.

(e) On the basis o f t he w r i t t en representa t ions received f r o m t h e Directors as on 31st M a r c h , 2007 and t aken on record by the Boa rd o f Di rectors , we report tha t none of t he Directors is d isqual i f ied as on 31st M a r c h , 2007 f r o m being appo in ted as a Director in t e rms of c lause (g) of sub-sec t ion (I) of Sec t ion 274 of t he C o m p a n i e s A c t , 1956.

(f) In our op in ion and to t h e best o f our in fo rmat ion and acco rd ing to t h e exp lana t ions g iven to us, t h e said f inanc ia l s t a temen ts , read t o g e t h e r w i th the s ign i f icant accoun t i ng pol icies and o ther notes t he reon and f o rm ing part o f t he accoun ts g iven in schedu le XI I I g ive t h e in fo rmat ion required by the C o m p a n i e s Ac t , 1956 in t h e manne r so required and present a t rue and fair v iew, in con fo rm i t y w i t h t h e accoun t i ng pr inciples genera l ly a c c e p t e d in India ; (i) In so far as i t relates to the Ba lance S h e e t , of t h e s tate of affairs of t he C o m p a n y as at 31 st M a r c h , 2007 ; (ii) In so far as i t relates to the Prof i t and Loss A c c o u n t of t he prof i t o f t h e C o m p a n y for t he yea r e n d e d on tha t

d a t e ; and (iii) In so far as i t relates to t h e Cash F low S t a t e m e n t of t h e cash f l ow of t he C o m p a n y for t he year ended on tha t

da te .

For GUPTA & JHUNJHUNWALA Chartered A c c o u n t a n t s

Place Delhi CA. MUKESH DUA D a t e d

M a y 2 6 , 2 0 0 7 Partner M . N o . 8 5 3 2 3

15

Auditors' Report

ANNEXURE TO THE AUDITORS' REPORT OF RELAXO FOOTWEARS LIMITED FOR THE YEAR ENDED 3 1 s t MARCH, 2007 (REFERRED TO IN PARAGRAPH 2 OF OUR REPORT OF EVEN DATE)

1. In respect of its f ixed a s s e t s : (a) The C o m p a n y has ma in ta ined proper records s h o w i n g full par t icu lars , inc lud ing quan t i t a t i ve deta i ls and

s i tuat ion of f ixed assets . (b) As exp la ined to us, t he f ixed assets have been physical ly ver i f ied by t h e M a n a g e m e n t at all loca t ions at

reasonab le in terva ls . No mater ia l d isc repanc ies b e t w e e n book records and the phys ica l inventor ies have been not iced on such ve r i f i ca t i on .

(c) In our o p i n i o n , t he c o m p a n y has not d i sposed off any subs tan t ia l / major part of f ixed assets du r ing t h e yea r and go ing conce rn s ta tus o f t he C o m p a n y is not a f f ec ted .

2. In respect of its i nven to r i es : (a) As exp la ined to us, inventor ies w e r e physical ly ver i f ied by t h e m a n a g e m e n t a t reasonab le intervals du r ing

the year. (b) In our op in ion and acco rd ing to t h e i n fo rmat ion and exp lana t ions g iven to us, t h e p rocedures o f phys ica l

ver i f i ca t ion o f inventory f o l l o w e d by the m a n a g e m e n t are reasonab le and a d e q u a t e in re lat ion to t h e size o f t h e C o m p a n y and t h e na ture o f its bus iness.

(c) In our op in ion and acco rd ing to t h e in fo rmat ion and exp lana t ions g iven to us, t h e C o m p a n y has ma in ta ined proper records o f its inventor ies . As exp la ined to us, no mater ia l d i sc repanc ies w e r e not iced on physical ver i f i ca t ion o f inventor ies as c o m p a r e d to the book records.

3 . In respect o f loans , secured or u n s e c u r e d , g ran ted or t aken by t h e C o m p a n y , t o / f r o m C o m p a n i e s , f i rms or o ther part ies cove red in t h e register ma in ta ined under sect ion 301 o f t he C o m p a n i e s A c t , 1956 : (a) The C o m p a n y has t aken unsecured loans a g g r e g a t i n g to Rs.384.56 lacs dur ing t h e yea r f r o m one party

cove red in the register ma in ta ined under sec t ion 301 o f t he C o m p a n i e s A c t , 1956. (b) In our op in ion and acco rd ing to t h e i n fo rmat ion and exp lana t ion g iven to us, t h e rate o f in terest and o ther

t e rms and cond i t ions are not pr ima fac ie prejudic ia l to t h e interest o f t h e C o m p a n y . (c) The C o m p a n y has not g ran ted any l oan , to a c o m p a n y , f i rm or o ther part ies cove red in t h e register

ma in ta ined under sec t ion 301 o f t h e C o m p a n i e s A c t , 1956. (d) The C o m p a n y is regular in pay ing t h e pr incipal a m o u n t s as s t ipu la ted and have been regular in p a y m e n t o f

interest in respect of loans refereed to in (a) a b o v e . (e) There is no o v e r d u e a m o u n t of loans t a k e n as referred to in (a) a b o v e .

4 . In our op in ion and acco rd ing to t h e in fo rmat ion and exp lana t ions g iven to us, t he re are a d e q u a t e in terna l cont ro l p rocedures c o m m e n s u r a t e w i t h t h e size o f t h e C o m p a n y and t h e na tu re o f its bus iness , for t h e pu rchase o f inventory and f ixed assets and for t he sale o f g o o d s and serv ices . Dur ing t h e course o f our aud i t , no major w e a k n e s s e s have been not iced in the internal con t ro l .

5. In respect of con t rac ts or a r r a n g e m e n t s tha t need to be en te red in the register ma in ta i ned in pu rsuance of sect ion 301 o f t he C o m p a n i e s A c t , 1956: (a) To t h e best o f our k n o w l e d g e and belief and acco rd ing to the i n fo rmat ion and exp lana t ions g iven to us,

par t icu lars o f con t rac ts or a r r a n g e m e n t s t ha t need to be en te red into t h e register, have been so e n t e r e d . (b) A c c o r d i n g to the in fo rmat ion and exp lana t ions g iven to us , t h e t ransac t i ons m a d e in pu rsuance o f such

con t rac ts or a r r a n g e m e n t s exceed ing t h e va lue o f Rs. f ive lacs have been en te red into dur ing t h e yea r a t pr ices w h i c h are pr ima fac ie reasonab le hav ing regard to t h e prevai l ing market pr ices a t t he re levant t i m e .

6 . In our op in ion and acco rd ing to t h e in fo rmat ion and exp lana t ions g iven to us, t h e C o m p a n y has not a c c e p t e d

16

Auditors' Report

a n y d e p o s i t w i t h i n t h e mean ing o f Sec t ion 5 8 A and Sec t ion 58AA o f t h e C o m p a n i e s Ac t , 1956.

7 . In our op in i on , t he C o m p a n y has an internal aud i t sys tem c o m m e n s u r a t e w i t h t h e size and na tu re o f its business.

8 . On the basis o f records p roduced we are o f t he op in ion tha t pr ima fac ie cost records and accoun t s prescr ibed by the Cent ra l G o v e r n m e n t under sect ion 209 (1) o f t he C o m p a n i e s A c t , 1956 in respect o f p roduc ts o f t h e C o m p a n y cove red under t h e rules under sa id sec t ion have been m a i n t a i n e d .

9. In respect of s ta tu tory dues :-(a) A c c o r d i n g to t h e records o f t h e C o m p a n y , und ispu ted s ta tu tory dues inc lud ing Prov iden t F u n d , Investor

Educa t i on and Pro tec t ion F u n d , E m p l o y e e s ' S ta te I nsu rance , I ncome Tax, Sa les Tax, W e a l t h Tax, Serv ice Tax, Cus toms Duty , Cess and other s ta tu tory dues have been genera l ly regular ly depos i t ed w i t h t h e app rop r i a te au thor i t ies . A c c o r d i n g to the i n fo rmat ion and exp lanat ions g iven to us , no und i spu ted a m o u n t s payab le in respect o f t h e a foresa id dues w e r e ou ts tand ing as at 31 s t M a r c h , 2007 for a per iod of more t h a n six mon ths f r om t h e da te o f becom ing payab le .

(b) The d ispu ted s ta tu tory dues a g g r e g a t i n g to Rs . 68.18 lacs, tha t have not been depos i t ed on a c c o u n t o f mat ters pend ing before app rop r i a te au thor i t ies are as unde r :

S.No. N a m e of t h e S ta tu te

N a m e of t h e Dues

Forum w h e r e d ispute is pend ing

A m o u n t (Rs. in lacs)

1. Haryana Genera l Sales Tax Act, 1973

Purchase Tax for the A .Y 2001-02 2002-03

Excise & Taxat ion Commiss ione r Excise &Taxa t i on Commiss ione r

19.89 14.24

2. Ha r yana Loca l A r e a Dev. Tax A c t , 2000

LADA Tax 2006-07 (Qtr. End ing M a r c h , 2007)

H igh Cour t , C h a n d i g a r h 17.79

3. Rajasthan Sales Tax Act

Sa les Tax 2004 -05 D.C. of C o m m e r c i a l Tax, Bhara tpu r , Ra jas than

5.95

4. ESI A c t , 1948 ESI Contribution Civil J u d g e Senior Divis ion C u m 10.31 d e s i g n a t e d ESI Cour t , R o h t a k (Ha ryana )

Total 68.18

10. The C o m p a n y has no a c c u m u l a t e d losses at t h e end of f inanc ia l year and has not incurred any cash losses du r ing the f inanc ia l year covered by our audi t and in the immed ia te l y p reced ing f inanc ia l year .

1 1 . Based on the aud i t p rocedures and on the basis o f i n fo rmat ion and exp lanat ions g iven by t h e m a n a g e m e n t , we are o f t h e op in ion tha t t h e C o m p a n y has not de fau l ted in t h e r e p a y m e n t o f dues to any f inanc ia l inst i tu t ion and banks.

12. A c c o r d i n g to the in fo rmat ion and exp lana t ions g iven to us, t h e Company has not g r a n t e d any loans and advances on the basis o f secur i ty b y w a y o f p ledge o f sha res , d e b e n t u r e s and others secur i t ies .

13. In our o p i n i o n , t h e C o m p a n y is not a chit f und or a nidhi / mu tua l benef i t f und / society. The re fo re , c lause 4 (xiii) o f t h e C o m p a n i e s (Audi tor 's Report ) Order, 2003 (as a m e n d e d ) is no tapp l i cab le to the C o m p a n y .

17

Auditors' Report

14. T h e C o m p a n y is not dea l ing or t rad ing in sha res , secur i t ies , d e b e n t u r e s and o ther i nves tmen ts , t he re fo re r equ i r emen t o f m a i n t e n a n c e o f proper records o f such t ransac t i ons and con t rac ts does not ar ise.

15. A c c o r d i n g to i n fo rmat ion and exp lana t ions g i ven to us t h e C o m p a n y has not g iven any g u a r a n t e e for loans t a k e n by o the rs f r o m Banks or F inanc ia l Ins t i tu t ions.

16. I n o u r o p i n i o n t h e t e r m loan has been uti l ised f o r t h e p u r p o s e s f o r w h i c h t h e s a m e w a s ra ised .

17. A c c o r d i n g to t h e cash f l ow s t a t e m e n t and o ther records exam ined by us and acco rd ing to t h e i n fo rma t ion and exp lana t i ons g iven to us, on an overa l l bas is , f unds raised on shor t t e r m basis h a v e , pr ima fac ie , not been used du r i ng t h e y e a r f o r long t e r m inves tmen t .

18. Dur ing t h e year , t h e C o m p a n y has not m a d e any pre ferent ia l a l l o tmen t o f shares to part ies and C o m p a n i e s c o v e r e d in t h e register ma in ta ined under Sec t i on 301 o f t h e C o m p a n i e s A c t , 1956.

19. T h e C o m p a n y has not issued d e b e n t u r e s and t h e r e f o r e , t he ques t ion o f secur i t ies or cha rge to be c rea ted in respect o f d e b e n t u r e s does not ar ise.

2 0 . T h e C o m p a n y has not raised any m o n e y by w a y o f publ ic issue dur ing t h e year .

2 1 . To t h e best o f our k n o w l e d g e and bel ief and acco rd ing to the in fo rmat ion and exp lana t ions g iven to us, no f r aud on o r by the C o m p a n y w a s not iced o r repor ted dur ing t h e yea r t ha t causes the f inanc ia l s t a t emen ts to be mater ia l ly m i ss ta ted .

For GUPTAS JHUNJHUNWALA Char tered A c c o u n t a n t s

CA. MUKESH DUA P l a c e : Delhi Partner D a t e d : M a y 2 6 , 2 0 0 7 M . N o . 8 5 3 2 3

18

Balance Sheet as at 31 st March, 2007

P a r t i c u l a r s SOURCES OF FUNDS SHAREHOLDERS' FUNDS Share Capital Reserves & Surplus

LOAN FUNDS DEFERRED TAX LIABILITY ( S e e N o t e N o . 15) TOTAL

APPLICATION OF FUNDS FIXED ASSETS Gross Block Less : Depreciat ion

NET BLOCK Cap i ta l w o r k - i n - p r o g r e s s

INVESTMENTS

CURRENT A S S E T S , L O A N S & ADVANCES Inven to r ies Sund ry Debtors Cash & Bank Balances Loans & Advances

L E S S : CURRENT LIABILITIES & PROVISIONS C u r r e n t L iab i l i t ies Provis ions

S c h e d u l e

III

IV

V

VI

VII

NET CURRENT ASSETS

T O T A L

Account ing Policies & Notes on Accounts XIII

A s p e r o u r repo r t o f e v e n d a t e FOR GUPTA & J H U N J H U N W A L A Char te red A c c o u n t a n t s

A s 3t 31 .03 .2007

6 0 0 . 0 6 4 5 3 1 . 3 8

1 1 0 5 7 . 9 1 3 4 2 4 . 4 9

7 6 3 3 . 4 2 1 7 1 8 . 9 4

2 2 3 6 . 8 5 1 5 1 6 . 2 4

3 6 0 . 3 3 7 7 0 . 9 8

4 8 8 4 . 4 0

1802 .48 4 1 0 . 3 4

2 2 1 2 . 8 2

5 1 3 1 . 4 4 6 0 1 0 . 5 8

8 8 8 . 0 6

1 2 0 3 0 . 0 8

9 3 5 2 . 3 6

6 .14

2 6 7 1 . 5 8

1 2 0 3 0 . 0 8

(Rs. in Lacs) A s s t

31.03 .2006

6 0 0 . 0 6 3 9 9 6 . 6 0

4 5 9 6 . 6 6 4 3 1 2 . 6 7

8 0 4 . 5 7

9 7 1 3 . 9 0

1 0 1 9 1 . 3 9 2 6 4 0 . 6 7

7 5 5 0 . 7 2

5 0 . 5 4

7 6 0 1 . 2 6 6 .14

1 5 2 5 . 3 0 1776 .71

2 4 3 . 9 1 5 9 8 . 8 6

4 1 4 4 . 7 8

1 8 3 7 . 7 8 2 0 0 . 5 0

2 0 3 8 . 2 8

2 1 0 6 . 5 0

9 7 1 3 . 9 0

CA. M U K E S H DUA Partner M . N O . 85323

Place : Delhi D a t e d : M a y 2 6 , 2 0 0 7

SUSHIL BATRA Ch ie f F i n a n c i a l O f f i ce r

SANDEEP CHANDNA C o m p a n y Secre tary

RAMESH KUMAR DUA M a n a g i n g D i rec to r

19

M U K A N D LAL DUA W h o l e T ime Director

L n j T J T J T J T J T J T J T J - T J - L T 1

Profit and Loss Account for the year ended 31st March, 2007

Particulars Schedule

I N C O M E Sales

Increase / (Decrease) in stock VIII O t h e r I n c o m e

TOTAL EXPENDITURE Mater ia l & M a n u f a c t u r i n g Expenses IX Personnel Expenses X Admin is t ra t ive , Sell ing & Other Expenses XI F inance Charges XII TOTAL

Profit Before Depreciat ion D e p r e c i a t i o n

Profit Before Tax Less: Provisions

- C u r r e n t Tax - F r inge Bene f i t Tax - Defer red Tax

Profit After Tax

B a l a n c e b/f f r o m p rev ious y e a r A d d / ( L e s s ) : Pr ior per iod a d j u s t m e n t s A m o u n t a v a i l a b l e for a p p r o p r i a t i o n

APPROPRIATIONS D i v i d e n d Tax on D i v i dend Transfer to Genera l Reserve Surplus carr ied to Ba lance Sheet

TOTAL

Basic & Di luted Earn ing Per Share (Rs.) ( S e e N o t e N o . 14) A c c o u n t i n g Policies & Notes on Accounts XIII

As per ou r repor t o f e v e n d a t e FOR GUPTA & J H U N J H U N W A L A C h a r t e r e d A c c o u n t a n t s

2 4 3 . 5 6 30 .53

2 0 0 6 - 0 7

2 3 5 9 3 . 4 8 4 2 3 . 1 5

94 .14

2 4 1 1 0 . 7 7

1 6 7 6 5 . 3 7 1 6 9 7 . 5 3 2 7 4 3 . 3 3

9 5 1 . 8 2

2 2 1 5 8 . 0 5 1 9 5 2 . 7 2

8 3 0 . 1 7

1 1 2 2 . 5 5

3 6 0 . 0 0 19.50

83 .49

6 5 9 . 5 6

2 7 4 . 0 9

9 3 3 . 6 5

90.01 15.30

5 0 0 . 0 0 3 2 8 . 3 4

9 3 3 . 6 5

5.50

(Rs. in Lacs) 2 0 0 5 - 0 6

2 0 0 8 5 . 8 5 (519 .22 )

9 7 . 5 5

1 9 6 6 4 . 1 8

1 3 9 3 9 . 2 4 1 2 7 7 . 1 9 2 5 2 8 . 4 9

728 .41

18473 .33

1190 .85 7 3 3 . 3 2

4 5 7 . 5 3

8 6 . 5 0 2 3 . 5 0

2 1 . 6 8

3 2 5 . 8 5 3 0 1 . 4 0

37 .27

6 6 4 . 5 2

90 .01 12.62

3 0 0 . 0 0 2 6 1 . 8 9

6 6 4 . 5 2

2 .72

CA. MUKESH DUA Partner M . N O . 8 5 3 2 3

Place : Delhi D a t e d : M a y 2 6 , 2007

SUSHIL BATRA Ch ie f F inanc ia l Of f i cer

S A N D E E P C H A N D N A C o m p a n y Secretary

RAMESH KUMAR DUA M a n a g i n g D i rec tor

2 0

M U K A N D LAL DUA W h o l e T i m e D i rec to r

Cash Flow Statement for the year ended 31st March, 2007

S.No. Part iculars 2 0 0 6 - 0 7 CASH FLOW FROM OPERATIVE ACTIVITIES :

PROFIT BEFORE TAX A N D EXTRA-ORDINARY ITEMS 1122.55 ADJUSTMENTS FOR Deprec i a t i on 830 .17 F inanc ia l Expenses 951 .82 I n terest Rece i ved (6.81) Pr ior P e r i o d a d j u s t m e n t 30 .53 C a p i t a l S u b s i d y 0.00 D o n a t i o n (50 .00) (Pro f i t ) /Loss on sa le o f A s s e t s 4 .52 O p e r a t i n g Prof i t b e f o r e w o r k i n g c a p i t a l c h a n g e s 2882.78 ADJUSTMENTS FOR

T r a d e and O t h e r rece ivab les 260 .47 Inven to r ies (711 .55) O t h e r Cur ren t Asse t s (172 .12) I n c o m e Tax (187 .21) T r a d e P a y a b l e s (182 .93) O t h e r Cur ren t L iabi l i t ies 164 .54 Net cash f l o w f r o m o p e r a t i n g ac t iv i t i es 2053.98 CASH FLOW FROM INVESTING ACTIVITIES :

P u r c h a s e o f Fixed A s s e t s (2723 .02 ) Fixed A s s e t s so ld / d i s c a r d e d 137.23 In terest Rece i ved 6.81 Net Cash used in invest ing act iv i t ies (2578.98) CASH FLOW FROM FINANCING ACTIVITIES P r o c e e d s f r o m long t e r m b o r r o w i n g s ( N e t o f r e p a y m e n t s ) 1697.91 D i v i dend Paid (102 .63) F inanc ia l Expenses (951 .82 ) Ne t Cash f r o m F inanc ing act iv i t ies ( 6 4 3 . 4 6 ) Net inc rease in cash & cash equ i va l en t s 118.46 Cash & cash e q u i v a l e n t s a t t h e - b e g i n n i n g o f t h e y e a r 2 3 8 . 9 3 Cash & cash e q u i v a l e n t s at t h e -end of t h e year 357.39

(Rs. in Lacs)

2 0 0 5 - 0 6

4 5 7 . 5 3

7 3 3 . 3 2 728 .41

(1.24) 37 .27 15.00

(18 .33) (0 .87)

1951 .09

322 .20 745 .19

(132 .34 ) (114 .21)

37 .20 (189 .08 ) 2 6 2 0 . 0 5

(1357 .53 ) 4 .10 1.24

(1352 .19) )

(614 .49) (102 .63) (728 .41 )

(1445 .53 ) (177 .67)

4 1 6 . 6 0 238 .93

As per our repor t o f even d a t e

FOR GUPTA & J H U N J H U N W A L A C h a r t e r e d A c c o u n t a n t s

CA. MUKESH DUA Partner M . N O . 8 5 3 2 3

Place : Delhi D a t e d : M a y 2 6 , 2007

SUSHIL BATRA Chie f F inanc ia l Of f icer

S A N D E E P CHANDNA C o m p a n y Secretary

RAMESH KUMAR DUA M a n a g i n g Di rec tor

2 1

M U K A N D LAL DUA W h o l e T i m e D i rec tor

U T J T J T J T J T J T J T J - L T L r L r '

Schedules Forming Part of Accounts

SCHEDULE - I SHARE CAPITAL

P a r t i c u l a r s

A s a t

3 1 . 0 3 . 2 0 0 7 AUTHORISED

2 , 0 0 , 0 0 , 0 0 0 E q u i t y S h a r e s o f R s . 5 / - e a c h .

ISSUED, SUBSCRIBED AND PAID UP

1,20,01,200 E q u i t y S h a r e s o f Rs . 5/- e a c h fu l ly p a i d . ( I n c l u d e s 1,02,28,600 fu l ly p a i d B o n u s S h a r e s issued by Capitalisation of General Reserve & Share Premium A/c) T o t a l

1 ,000 .00

6 0 0 . 0 6

6 0 0 . 0 6

( Rs. in Lacs ) A s a t

3 1 . 0 3 . 2 0 0 6

1,000.00

6 0 0 . 0 6

6 0 0 . 0 6

SCHEDULE - II R E S E R V E S A N D S U R P L U S

(A) CAPITAL RESERVE As per Last Balance Sheet

A d d : Cap i ta l subs idy rece ived dur ing t h e y e a r

Total (A)

(B) SHARE P R E M I U M ACCOUNT

(C) GENERAL RESERVE As per Last Balance Sheet A d d : Transfer f r o m Prof i t & Loss A / c

Total ( C )

(D) PROFIT & LOSS ACCOUNT A m o u n t t rans fe r red f r o m Prof i t & Loss A c c o u n t

Less : Dona t i on

Total ( D) Tota l (A + B + C + D)

15.36

0.00

15.36

73.94

3,663.74

5 0 0 . 0 0 4 , 1 6 3 . 7 4

3 2 8 . 3 4

5 0 . 0 0

2 7 8 . 3 4

4 ,531 .38

0.36

15.00

15.36

73.94

3,363.74

300 .00 3 ,663.74

261 .89

18.33

243 .56

3 ,996 .60

22

@msss^ feu &3i)fi U T J T J T J T J T J T J T - T L T L a r

Schedules Forming Part of Accounts

SCHEDULE - III LOAN FUNDS

Particulars

(A) S E C U R E D LOAN FROM BANK

(I) T E R M LOAN - In terest A c c r u e d a n d D u e on Loan

(II) W O R K I N G CAPITAL LOAN

Total ( A )

(B) UNSECURED LOANS

- F r o m Di rec tors

- F r o m O t h e r s

- F r o m F inanc ia l Ins t i tu t ion

- In teres t A c c r u e d & d u e on L o a n s

- Secu r i t y Depos i t s f r o m Dis t r ibu tors

As a t 3 1 . 0 3 . 2 0 0 7

2 , 1 9 4 . 8 9

18.87

2 , 2 1 3 . 7 6