1) ACCOUNTING PROCEDURE :
 
 The accounts are prepared in accordance with the Generally accepted
 Accounting commercial Principles, guidelines issued by the Department
 of Companies Affairs, Ministry of Industries and the Institute of
 Chartered Accountants of India. Generally accrual basis is adopted in
 the preparation of accounts.
 
 2) FIXED ASSETS :
 
 The Fixed Assets are stated at cost, net of MODVAT Inclusive of taxes,
 duties, freight and other incidental expenses incurred in relation to
 acquisition and installation of the same less Accumulated Depreciation.
 
 3) DEPRECIATION :
 
 Depreciation on Fixed Assets has been provided on straight line method
 at the rates specified in the Schedule XIV of the Companies Act, 1956
 on prorata basis (quarterly).
 
 4) INVESTMENTS :
 
 Investments are stated at cost.
 
 5) INVENTORIES :
 
 We have not verified the opening and closing Stock however the same
 have been taken as valued & verified by the management.  It is
 explained by the management that the stock of raw material work in
 process, finished goods and trading yarn stock have been valued at
 lower of cost or net realisable value and stock of colour & chemicals,
 Packing Materials and Spares have been valued at cost.
 
 6) SALES :
 
 Sales of Yarn produced is net of Excise, Cess etc.
 
 7) PURCHASE :
 
 The Purchase of Raw-Material are taken as net of excise.
 
 8) CLOSING STOCK :
 
 As per past practice, excise duty is accounted for as and when goods
 are cleared. Accordingly excise duty in respect of uncleared closing
 Stock has not been provided for and therefore not considered for
 valuation thereof.  This Accounting treatment has no effect on the
 profit for the year.
 
 9) EXCISE & MODVAT CREDIT :
 
 Modvat Credit on Purchase of Raw Material and Fixed Assets wherever
 applicable are taken into account at the time of Purchase to the credit
 of the respective purchases and are utilised for payment of Excise Duty
 on goods manufactured.  The unavailed Modvat Credit is carried forword
 in the books.
 
 10) FOREIGN CURRENCY TRANSACTION :
 
 During the year under consideration there was no any transaction made
 in foreign currency.
 
 11) CONTINGENT LIABILITY :
 
 a) The sum of Rs. 84,883/- paid in last year towards Modvat Credit
 disallowed by Excise Department against which appeal has been made with
 the Superior authorities.
 
 b) There may be a Contingent liability of Rs. 50,50,519/- in respect of
 advance received from banks under UDBP on Hundi's made on debtors.
 
 12) PRELIMINARY AND SHARE ISSUE EXPENSES :
 
 One tenth of Preliminary and Share Issue expenses have been written off
 during the year.
 
 13) REVENUE RECOGNISATION :
 
 All revenue are generally recognised on accrual basis.