1) CONTINGENT LIABILITIES:
 
 a) For Foreign Bills Discounted against Letters of Credit Rs.
 9,20,82,322/- (Previous Year Rs. 7,21,49,556/-).
 
 b) For Indigenous Bills Discounted against Letters of Credit Rs. NIL /-
 (Previous Year Rs.72,30,435/-)
 
 c) Claim against the Company not acknowledged as debts- NIL
 
 2) SECURED LOANS
 
 a) The company has fully repaid the Non Convertible Debentures due to
 Kotak Mahindra Bank Ltd. Accordingly amount of Debenture Redemption
 Reserve of Rs. 165 lacs has been transferred to Profit & Loss Account.
 
 b) Medium Term Loan due to Kotak Mahindra Bank Ltd. is secured by
 equitable mortgage of land and building situated at Doraha and Jugiana
 and further secured by first charge on all movable fixed assets of the
 company (except one Auto Coner Machine) and personally guaranteed by
 three Directors of the company. These are repayable in 42 equal monthly
 installments commencing from June,2008.
 
 c) Export Packing Credit Limit is secured by hypothecation of the
 stocks of raw material, work in process, finished goods, goods in
 transit, stores & spares and book debts and second charge on the fixed
 assets of the Company and personally guaranteed by three Promoter
 Directors.
 
 d) Medium Term Loan of UCO Bank, is secured by first charge on one Auto
 Coner Machine and personally guaranteed by three Directors of the
 Company.
 
 3) The company has not provided Penal Interest amounting to Rs. 67.93
 lacs payable to Kotak Mahindra Bank Ltd, as the company has applied for
 Restructuring of its loan account with Kotak Mahindra Bank Ltd.
 
 4) Debit or Credit Balances on whatever account are subject to
 confirmation from parties, as such their effect on Profit & Loss
 Account cannot be reflected.
 
 5) In the opinion of the Board, all the current assets, loans and
 advances have a value on realization in the ordinary course of
 business, at ieast equal to the amount, at which they are stated.
 
 6) The Company had paid the electricity expenses of Rs. 1,00,000/- in
 the earlier years being additional demand raised by concerned
 department from time to time, which has been contested by the company.
 The demand has, however, been paid under protest and shown under the
 head Loans & Advances. No provision has been made in the books of
 accounts as the Company is hopeful to get desired relief in Appeal.
 
 7) Based on a revaluation report, land at Jugiana was revalued as on
 1st April, 1987, which resulted an increase in gross block of
 Rs.1,17,69,380/-.
 
 8) The Company has, on the basis of technical advice, treated the
 Cotton Spinning unit as continuous process plant. Depreciation for the
 year has been provided accordingly. Had the depreciation provided under
 the category of General Plant and Machinery, the charge of depreciation
 would have been Rs. 66,55,030/- instead of Rs. 4,37,08,556/- (Previous
 year Rs. 65,60,102/- instead of Rs.3,33,85,486/-).
 
 9) The previous years figures have been recasted or regrouped wherever
 necessary, in order to confirm to this years presentation.
 
 10) Sundry Debtors includes amount of Rs. 1286.01 lacs, which are
 outstanding for more than 3 years for which no provision has been made
 for doubtful debtors as company is taking steps for recovering the
 amount.
 
 11) In compliance with the Accounting Standard 22, Accounting for Tax
 on Income, issued by The Institute of Chartered Accountants of India,
 deferred tax assets are amounting to Rs. 9,91,60,879/- up to
 30.09.2010. Further, impact of decrease in net deferred tax assets
 amounting to Rs. 3,00,17,438/- has originated during the year, which is
 to be recognised subject to consideration of prudence. Components of
 deferred tax assets are as under: -
 
 12.  Regarding impairment of assets, on assessment, it has been
 ascertained that no potential loss is present. Accordingly, no
 impairment loss has been provided in the Books of Account.
 
 13) Employee Benefits:
 
 a) The Company has complied with Accounting Standard (AS-15 Revised)
 required to be so complied by the Companies (Accounting Standards)
 Rules, 2006 w.e.f 01.07.2009.
 
 14.  Additional information as required by Schedule VI of the Companies
 Act., 1956:
 
 15.  Segment Reporting
 
 A.  Primary Business Segment
 
 The Company operates in only one business segment viz.  Cotton
 Spinning , which is reportable segment in accordance with the
 requirements of Accounting Standard (AS)-17 on Segment Reporting,
 issued by The Institute of Chartered Accountants of India.
 
 16) Related Party Transaction
 
 1.  Name of the parties and description of relationship
 
 A). Associates
 
 i). Oswal Capital Services Ltd.
 
 ii). Oswal Cottex Exports Ltd.
 
 iii). Vallabh Trading & Mercantile Co.Pvt.Ltd.
 
 iv). Vallabh Traders Pvt.Ltd.
 
 v). Oswal Industries Pvt.Ltd.
 
 vi). Oswal Impex Pvt.Ltd.
 
 vii) Rajan and Santosh Pvt.Ltd.
 
 B). Key Management Personnel
 
 (i) Sh.R. P. Oswal  
 
 (ii) Sh.A.K.Oswal  
 
 (iii) Sh.Sambhav Oswal