(i) Previous year figures have been regrouped and rearranged wherever
 considered necessary.
 
 (ii) In the previous year 2007 - 2008 the Company has prepared the
 financial statements for the 15 months unlikely the financial
 statements prepared in the earlier years. However, the change in
 accounting policy has not affected materially to the financial
 statements of the Company. Further, the results for both the financial
 years i.e., ended as at 31.03.2008 and 31.12.2006 are not comparable.
 
 (iii) Due to poor financial position of the Company and other related
 factors, the company was not been able to repay the amounts due in
 respect of term loans as well as working capital loans & overdrafts
 obtained from Scheduled Banks & other Financial Institutions as a
 result of which whole of the Fixed Assets has been acquired by the IFCI
 Ltd vide panchnama dated 13.03.2008.
 
 (iv) During the year company has credited the profit and loss account
 with the total amount of Rs.6452 thousand as prior period items on
 account of following error/omission incurred in the previous year:
 
 i. Rs.6226 thousand on account of Service tax liability created in the
 earlier year as prior period adjustment on account of non
 interpretation of law.
 
 ii.  Rs. 226 thousand on account of commission charges created in the
 provision
 
 (v) Depreciation on Fixed Assets has been charged on Straight line
 method basis upto 13.03.2008 as whole of the Fixed Assets has been
 compulsory acquired by the IFCI Ltd as a result of non payment of dues.
 
 (vi) No provision for taxation has been made in the annexed accounts,
 as there is no liability in respect of the same. The company has not
 adopted AS-22 Accounting for Taxes on Income issued by the ICAI as
 the company has carried forward business losses & unabsorbed
 depreciation from previous years and according to the information &
 explanations given by the management of the company there is no
 certainty as to whether in future the company will be able to generate
 profits. Therefore following the concept of prudence & virtual
 certainty as envisaged by the aforesaid AS-22, provisions for DTA/DTL
 have not been made in the annexed accounts.
 
 (vii) Due to overall sluggish market conditions, poor financial
 position of the Company and various other factors, it has not been able
 to repay term loans as well as working capital loans & overdrafts
 obtained from scheduled banks & Financial Institutions as per the
 repayment schedule. The management has dispensed the provision of
 providing interest, interest on interest, overdue interest, penal
 interest and liquidated damages on Term loan and all the working
 capital loans from all the Scheduled Banks/Financial Institutions the
 aggregate amount has not been ascertained. As in the opinion of
 management providing such huge amount of interest, which is merely
 based on management estimation in the absence of non-availability of
 any documentary evidences to support the amount, is not relevant at
 this stage.
 
 (viii) Company has not deposited the statutory dues towards employer
 provident fund, employee state insurance, Central Sales Tax (incl of
 7027 thousand and 3625 thousand.)
 
 (ix) During the period covered under audit the company had adjusted
 security deposits made with Madhya Pradesh electricity board of Rs 8678
 thousands on account of electricity dues.
 
 As per the information available with the company none of the
 creditors have confirmed that they are registered under the Micro and
 Small Enterprises Development Act, 2006.
 
 (x) INVESTMENTS
 
 (a) The instruments are held in the name of Company except to the
 extent exempt under section 49 of the Companies Act, 1956.
 
 (b) Investments held are fully paid-up unless otherwise stated.
 
 (c) Aggregate Book value of Investments as at the year-end is 16456.12
 thousand (Previous Year 266 thousand).  Market value of quoted
 investments (to the extent stock exchanges quotations are available) is
 Rs. 1.40 thousands (previous year Rs. 59.44 thousand). The aggregate
 book value of unquoted investment is 16454.72 thousand (Previous Year
 204.66 thousand).
 
 (xi) Sundry debtors, Loans and advances, creditors, balance in Current
 Account, Packing Credit Account with banks and Rupee Term Loan Accounts
 with Financial Institutions / Banks are subject to confirmation and
 reconciliation with respective Parties / Banks/ Financial Institutions.
 
 (xii) As per the information and explanations given to us by the
 management of the company, the unpaid/unclaimed dividend lying idle in
 UCO Bank account for Rs.892 thousands has not been transferred to the
 general revenue account of the Central Government in accordance with
 the provisions of section 205-A of the Companies Act, 1956 because of
 the following reasons:
 
 (a) No intimation for transfer of the amount by UCO bank has ever been
 received by the company.
 
 (b) Despite being repeated efforts made by the company to collect
 information regarding these accounts, no information .  has been
 received by the company so that the legal requirements regarding the
 transfer of the amount could have been complied with.
 
 The management has filed an application with UCO Bank under the Right
 to Information Act, 2005 to collect the reconciliation statement in
 order to ascertain exactly how much amount is remaining after settling
 the claims of shareholders that has to be transferred u/s 205-A of the
 Companies Act, 1956.
 
 (xiii) Contingent Liabilities not provided for        Year ended as on
                                                        31st March 2008
 
 Penalty u/s 271(1)(c) under 
 Income Tax of Rs.3408 thousand in                        3408 thousand
 respect of Assessment Year 2002-03 
 in respect of which the company has gone 
 on appeal in ITAT, New Delhi. Based on
 judicial pronouncements, the Companys 
 claim is likely to be accepted by 
 appellate authorities.
 
 A total demand of Rs. 1698 thousand 
 for excise duty & penalty in                             1698 thousand
 relation to the waste sales without 
 payment of appropriate duty
 was earlier pending before the 
 Honorable supreme court which
 during the year referred back to 
 CESTAT for re-consideration by
 the honorable apex court. 
 Based on recent judicial pronouncements,
 the Companys claim is likely to 
 be accepted by appellate authorities.
 
 A total amount of Rs. 13699 
 thousand is pending before different                    13699 thousand
 appellate Authorities under M.RCommercial 
 Act, 1994 in different stages.
 Based on recent Judicial pronouncements, 
 the Companys claim is likely
 to be accepted by Appellate authorities.
 
 The Company has filled an appeal 
 with Commissioner of Income Tax                         90000 thousand
 (Appeal) for the assessment year 2003 - 2004 
 which involves an amount
 of Rs. 90000 thousand.
 
 The company has filed appeal to CESTAT 
 against order of Commissioner                            1851 thousand
 (Appeals), Customs & Central Excise, 
 Indore ordering payment of Import
 Duty of Rs. 1851 thousand for the 
 Tata Murata Auto Corner, Other Contingent 
 Liabilities not provided for Include:
 
 (a) Excise Duty (On account of excess OTA removal) for Rs. 2090
 thousands.
 
 (b) Custom/Excise Duty (On account of removal of Diesel Generator sets)
 for Rs. 2494 thousands.
 
 (c) Excise Duty demanded through SCN on account of search & seizure
 took place at both Plant & Head office- Excise duty on Polyester Yarn
 for Rs. 32300 thousands
 
 Excise duty on Cotton Yarn for Rs.18565 thousands
 
 Excise duty on DTA sales for Rs. 25428 thousands
 
 Excise duty for charging lower rate of duty for Rs. 1259 thousands
 
 Excise duty on account of foregoing duty on PSF for Rs.1240 thousands
 
 Custom Duty on account of foregoing duty on HSD/LDO Import for Rs.9122
 thousands.
 
 (d) The Asst.Commissioner Commercial, Gwalior in his order dated 29th
 January 2007, has imposed demand of sales tax inclusive of interest &
 penalty on the company for an amount of Rs. 15635 thousands.
 
 (e) A demand of Rs. 6356 thousands had been raised by the electricity
 department, Gwalior as Electricity duty chargeable on production of
 electricity generated through Diesel generator in earlier period.
 However the management of the company considers it contingent that
 since the company is a sick company and the application is already
 pending in AAIFR for its final decision, than only the exact liability
 will be known.
 
 However in the opinion of the management all the above-mentioned
 liabilities are contingent in nature, as company will contest the
 demand by filing appeals to the respective departments.
 
 In view of the above the same have not been considered in the financial
 results up to the reporting period.
 
 (xiv)Security Deposit worth Rs. 13,793 thousand standing with MPSEB
 (Madhya Pradesh State Electricity Board) on account of Electricity has
 been adjusted with the Dues for the Electricity Expenses for the years.
 
 (xv) Segment Reporting
 
 Since the company primarily operates in,one segment-Cotton & Polyester
 Staple Fibre (PSF). Segment reporting as required under AS-17 Segment
 Reporting issued by the ICAI is not applicable to the company.
 
 (xvi) The Company still this year has consumption of 5.45 electricity
 unit per kg. of yarn production. As compared to the industry average of
 4 unit per kg. of yarn production. The same is due to low productivity.
 
 (xvii) The Company had filed a reference with the Honorable Board for
 Industrial & Financial Reconstruction (BIFR) on 2nd January 2001 The
 same was accepted by the Honorable BIFR vide case no. 30/2001 on 12th
 January 2001 The Honorable BIFR vide its order dated 18th August 2005
 ordered for the winding up of the Company. Being aggrieved by this
 order the Company went into appeal with Honorable Appellate Authority
 for Industrial & Financial Reconstruction (AAIFR) on 4th October 2005
 and the same was admitted by the AAIFR vide appeal no. 115/2005.The
 reference made by the Company has been abated by the AAIFR in its last
 hearing held in the Month of May 2007.
 
 In calculating EPS, No.of shares used are 18705956 which have been
 arrived at after deducting 16044 equity shares (relating to calls in
 arrears of Rs. 160442 divided by Rs. 10 face value per share) from the
 originally issued 18722000 shares.
 
 (xviii) Trading of the shares of the company has been suspended by the
 Bombay Stock Exchange w.e.f 18th February 2002.The company had filed an
 application for the revocation of suspension of trading of securities
 of the company on which final decision of the BSE is still pending till
 the date of this report.
 
 The company has also applied for the de-listing of its securities vide
 resolution passed by the shareholders in the AGM held as on 13th June
 2006 as in the opinion of management since the company is a sick
 industrial company getting the securities listed on more than one stock
 exchange is a financial burden to the company. However no de-listing
 order has yet been received by the company.