1.  In the opinion of the Board the current assets, loans and advances
 are approximately of the value stated, if realised in the ordinary
 course of business and the provisions for all the known liabilities are
 adequate.
 
 2.  Balances of sundry debtors, sundry creditors, loans and advances,
 loans from financial institutions and banks, stocks lying with the
 third parties and other balances are subject to
 confirmation/reconciliation and consequential adjustments.
 
 3.  Contingent liabilities not provided for:
 
 i) Show Cause notices/summons received from excise authorities for
 under valuation of excisable goods manufactured and cleared - amount
 not ascertainable.
 
 ii) Sales tax matters for the year 1991-92, 1992-93 and 1993-94 where
 the company has preferred appeals before higher authorities, on legal
 grounds, where there will be no liability. Further sales tax matters
 for the year 1999-2000 and 2000-2001 are also in appeal involving the
 liability of Rs. 8.28 lacs (Rs. 1.70 lacs).
 
 iii) In the matters for the Assessment Year 1999- 2000, 2004-2005 and
 2005-2006, where the company has preferred appeals before higher
 authorities, on legal grounds, having liability of Rs. 201.49 lacs in
 respect of penalty and Rs. 1.95 lacs in respect of income tax, without
 considering further interest or penalty thereon.
 
 5.  No provision has been made for accrued gratuity and bonus. The same
 will be provided as and when paid.
 
 6.  The company has, on the basis of technical opinion and continuous
 operation in three shifts throughout the year of the texturising plant
 and machinery, treated the same as continuous process plant for the.
 purpose of computation of depreciation, which however is not consistent
 with the recommendation of Institute of Chartered Accountants of India,
 as a result, up to date depreciation charge is lower by Rs 13.44 lacs
 (Rs. 44.30 lacs) after taking into account Rs. 12.76 lacs (Rs. 10.98
 lacs) excess charge for the year under review. Had this practice not
 been followed, the block of plant & machinery of Jalgaon unit would
 have fully depreciated.
 
 7.  The remuneration paid by the Company to its whole time directors
 was not approved by the Remuneration Committee as per conditions of
 Schedule XIII of the Companies Act 1956. Secondly the Company has also
 made default in repayment of its debts and debentures.
 
 8.  The income tax assessment of the company has been completed up to
 Assessment Year 2005-2006 and no provision for income tax has been made
 for the financial year ended 31st March 2008 as according to the
 company, there is no assessable income for the year.
 
 9.  No provision has been made in respect of interest accrued and due
 on the unpaid instalments which have already become due pertaining to
 Special Capital Incentives and Sales Tax Incentives received in the
 form of unsecured loans in the absence of proper information available
 with the company.
 
 10. Figures for the previous year have been regrouped, rearranged and
 recasted whenever necessary to make them comparable with the figures of
 the current year and in the financial statements; any discrepancies in
 any total and the sum of the amounts listed are due to rounding off.
 
 11. Loans & advances and sundry debtors include the following debit
 balances due from the company under the same management and other
 parties in which the directors of the company and / or their relatives
 are interested as director/partner/proprietor:
 
 12. The manufacturing operations at the Jalgaon unit of the company
 have been suspended due to heavy losses resulting in erosion of working
 capital fund.  Since company net worth as at 31.03.2000 was fully
 eroded, it filed a reference with BIFR. The BIFR declared the company
 as sick and appointed Central Bank of India as an Operating Agency to
 examine the viability of the company.
 
 The OA appointed The Bombay Textile Research Association (BTRA) for
 preparation of Techno Economic Viability Study and revival scheme
 (TEVS). BTRA has submitted TEVS report to OA. The company has also
 submitted its rehabilitation proposal to OA on the basis of guidelines
 submitted by BTRA that was not acceptable to the OA and consortium
 members on the ground that it was not in line with the RBI guidelines.
 In the hearing before BIFR on 7th April 2003, since BTRA report,
 submitted to OA, was not acceptable to secured creditors, the BIFR
 ordered the Change of Management (COM).  The OAwas also changed to IDBI
 in place of CBI. In the absence of any concrete proposal, the BIFR
 directed to send the matter to concerned High Court to wind up the
 company.
 
 The Honourable High Court, Mumbai issued notification to official
 liquidator for appointing him as provisional liquidator and the hearing
 before the liquidator is in process. The company, in view of OTS with
 secured creditors, is in the process of filing an appeal before the
 Honourable High Court, Mumbai to give permission for sale of its fixed
 assets to clear the dues payable under OTS.
 
 Secondly in respect of liabilities provided in the accounts further to
 add that pursuance to the heavy losses, the company suspended its yarn
 manufacturing Works / functioning in its units / factories a long back
 and in lieu of no improvement in the textile market but reactant slack
 down, it has closed down yarn manufacturing units / factories long back
 and approached to BIFR in the year 2000- 2001 and subsequently BIFR
 declared the company sick industrial undertaking.
 
 Therefore it is pertinent to say that the liabilities of the company
 towards all financial institution / banks, of its principles amounts,
 interest and compound interest along with rate inconceivable /
 untenable and can not be taken as the admitted liabilities but under
 scanner / scrutinisation / arbitrated / prima- facie and subject for
 the verdict of an appropriate Court of Law as per provision i.e. the
 liabilities stand as disputed / integrated.
 
 In spite of the above facts the accounts of the company, including
 Jalgaon unit, the operations of which were suspended and Kim unit also,
 the plant & machinery of which were sold, have been prepared on the
 concept that company will continue as a going concern.
 
 13. Due to non availability of the information with company regarding
 status of the suppliers registered as the Micro, Small and Medium
 enterprises under the Micro, Small and Medium Enterprises Development
 Act 1951, the quantum of the amount due to such suppliers and interest
 thereon, if any could not be determined.
 
 14. No provision has been made in respect of interest, in view of OTS,
 on outstanding secured loans for the financial year 2007-2008 and
 overdue and compound interest and liquidated damages on late
 payment/defaults in payment of interest as well as repayment of
 instalments of loans and non- convertible debentures, as the same could
 not be determined / ascertained properly.
 
 15. IDBI has filed a recovery suit before the Debt Recovery Tribunal at
 Mumbai for Rs. 183.94 lacs and further interest till the date of actual
 payment and the DRT issued temporary injunction against the company
 that until further order, it should not dispose off, transfer, mortgage
 etc. of its properties involved in the loan transaction. Subsequently,
 Bank of Baroda has also become co-applicant with IDBI in the recovery
 suit before DRT. However the IDBI settled its dues OTS, but Bank of
 Baroda is yet to arrive at OTS.
 
 16. Provision for interest, till financial year 2006-2007, on term
 loans from banks and financial institutions has been made @ 18% p.a.
 and on working capital loans from banks @ 15% p.a. in the absence of
 proper information with the company and rounded off to Rs. 1000/- as
 was done in the earlier years.  The company has recognised the relief
 granted by IDBI and SICOM on making full payment as per OTS amounting
 to Rs.69622565/- representing relief towards interest Rs.61823260/- and
 towards principle amount Rs. 7799305/-.
 
 The accounting effect of the relief under OTS with outstanding secured
 creditors.will given only after payment of amount of OTS to respective
 secured creditors and on getting the no dues certificates from them.
 
 17.  Due to heavy losses continuously incurred in the past, the company
 is not in the position to have the fair value, determined, of its
 assets as compared to the carrying amount of such assets as required by
 AS-28 for impairment of assets.
 
 18.  In view of the losses, Debenture Redemption Reserve has not been
 created during the year.
 
 19.  The office of Company Secretary has been vacant since 1997-98, in
 the circumstances; the authentication by Company Secretary does not
 appear in the Accounts.
 
 20 Related Party Disclosure:
 
 a) The control of the company exists with Shri Radheshyam Poddar
 -Chairman & Managing Director of the company and Shri Pradeep Poddar &
 Shri Sunil Poddar who both are also key management personnel.
 
 b) The names of the enterprises of related parties where transactions
 have taken place are P. Fabrics, Adhunik Yarns limited and Adhunik
 Fintrade Ltd.
 
 c) The names and relation of the relatives of related parties where
 transactions have taken place is Shri Sandeep Poddar, son of Chairman &
 Managing Director and brother of both the Joint Managing Directors.
 
 d) The other controlled enterprises of related parties are Sarika
 Texoverseas (I) Limited, Travel Vistas and R. Omprakash.
 
 21.  In respect of Taxes On Income:
 
 As the company has incurred substantial losses in past several years
 and total net worth of the company has eroded by 31.03.2000, though the
 company has huge carried forward losses and depreciation as per the
 returns of income filed with the Income Tax Department but as a prudent
 policy and due to uncertainty in availing the future taxable income, no
 deferred tax assets has been recognized as on 31.03.2008.