Dear Shareholders,
 
 The directors have pleasure in presenting the Twenty First Annual
 Report of the Company together with audited financial statements and
 accounts for the year ended March 31, 2012.
 
 Financial Highlights
 
                                       (Rupees in Lakhs)
 
 Particulars                            2011-12          2010-11
 
 Gross Revenue                             0.64             5.78
 
 PBITD                                    -7.45             0.85
 
 Cash Profit from operations              -7.45             0.84
 
 Net Profit/(-)Loss                       -7.45             0.84
 
 Operations:
 
 Due to continued drought situation in the region and the reasons beyond
 the control of your directors your company has not undertaken any
 business, but with a view to curtail the mounting losses the Company
 has leased-the godown facilities on rent basis to State Warehouse
 Corporation and to private parties. But due to continued drought
 situation even demand for godown is also less, hence building has been
 leased from Feb 2012 onwards, resulting less rental revenue during the
 year compared to previous year. The directors are under the process of
 exploring other avenues of diversifying into new areas of business
 
 All remaining assets and liabilities are valued on a Going Concern
 basis. Though there is no business is undertaken, its net worth remains
 positive and considering the fact that the company has adequate
 resources to continue in operational existence for the foreseeable
 future and taking into account the management assessment of improvement
 in the economic condition in general they continue to adopt the going
 concern basis in preparing the annual report and accounts.
 
 Dividend
 
 In view of inadequacy of profits, your Directors are unable to
 recommend any dividend for the year under report.
 
 Corporate Governance
 
 A detailed report on Corporate Governance pursuant to the requirements
 of Clause 49 of the Listing Agreement forms part of the Annual Report.
 A certificate from the auditors of the Company, H.M.V. Murthy & Co.,
 Chartered Accountants, confirming compliance of conditions of corporate
 governance as stipulated under the aforesaid Clause 49 is provided as
 annexure.
 
 Management Discussion and Analysis Report
 
 The management discussion and analysis of financial condition including
 the result of operation of the Company for the year I under review as
 required under clause 49 of the listing agreement with the stock
 exchange is given as a separate statement in Annual Report.
 
 Auditors:
 
 The Statutory Auditors of the Company, M/s. H.M.V. Murthy & Co.,
 Chartered Accountants, Bangalore, retire at the conclusion of the
 ensuing annual general meeting of the Company and have confirmed his
 willingness and eligibility for re-appointment and has also confirmed
 that his re-appointment, if made, will be within the limits under
 Section 224(1 B) of the Companies Act, 1956.
 
 Auditors'' Report:
 
 The Board has duly examined the statutory auditors'' report to accounts
 which is self explanatory and clarifications wherever necessary, have
 been included in the Notes to Financial Statements of the Annual
 Report.
 
 Regarding Auditors comment on ''on going concern'' the Director contend
 that the Company will be able to continue as going concern, though the
 company has not undertaken any business activity, its net worth remains
 positive and considering the fact that the company has adequate
 resources to continue in operational existence for the foreseeable
 future and taking into account the management assessment of improvement
 in the economic condition in general and as borne out by AAS16 issued
 by the council of the ICAI, they continue to adopt the going concern
 basis in preparing the annual report and accounts.
 
 The huge accumulated losses suffered till closure of spinning activity
 by the company have been mainly on account of unstable and erratic
 market conditions which had affected adversely the entire industry
 rather than the operational performance of the company. Your directors,
 however, continue their efforts to improve the financial viability of
 the company and also take such steps as may be required under current
 laws and regulations in terms of disclosure and reporting required to
 be made to concerned statutory authorities.
 
 Particulars of Employees
 
 During the year there was no employee drawing remuneration beyond the
 limits prescribed under section 217 (2A) of the Companies Act, 1956,
 read with the Companies (Particulars of Employees) Rules, 1975.
 
 Conservation Of Energy, Technology Absorption and Foreign Exchange
 Earnings and Outgo:
 
 Disclosure in respect of conservation of energy as required under
 Section 217(1) (e) of the Companies Act, 1956, read with the Companies
 (Disclosure of Particulars in the report of the Board of Directors)
 Rules, 1988, as amended is given below.
 
 Conservation Of Energy. Technology Absorption, Foreign Exchange
 Earnings and Outgo are Nil during the year.
 
 Directors'' Responsibility Statement
 
 Pursuant to the requirement under section 217(2 AA) of the Companies
 Act, 1956, with respect to the directors'' responsibility statement it
 is hereby confirmed that:
 
 i.  In the preparation of the annual accounts for the financial year
 ended March 31, 2012, the applicable accounting standards read with
 requirements set out under Schedule VI to the Companies Act, 1956, have
 been followed and there are no material departures from the same;
 
 ii.  The Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent, so as to give a true and fair view of the state of affairs
 of the Company as at March 31, 2012 and of the loss of the Company for
 the said period.
 
 iii.  The Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956, for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities; and
 
 iv.  The Directors have prepared the annual accounts of the Company on
 a ''going concern basis''.
 
 Acknowledgements
 
 Your Directors wish to place on record their appreciation for the
 continued support and co-operation of the shareholders, Bankers,
 various regulatory and Government authorities and for the valuable
 contributions made by the employees of the Company.
 
                                    On behalf of the Board of Directors
 
                                                      S. Rajasekharappa
 
 Challakere, 27th August 2012                                  Chairman