1.  SHARE CAPITAL
 
 1.1 Each Shareholder of Equity Share is entitled to one vote per share
 on a poll.
 
 1.2 In the event of liquidation of the Company, the holders of equity
 shares will be entitled to receive any of the remaining assets of
 company, after distribution of all preferential amounts. The
 distribution will be in proportion to the number of Equity shares held
 by the shareholder.
 
 1.3 The Company has not paid any dividend on Cumulative Redeemable
 Preference Share since 1996-1997. Dividend on Cumulative Redeemable
 Preference Shares amounting to Rs. 110.75 lacs, (upto the period Rs.
 1772.00 lacs) have not been provided in view of accumulated losses. The
 company expects waiver/relief under rehabilitation scheme being
 submitted to BIFR.
 
 1.4 The Cumulative Redeemable Preference Share holder are entitled to
 cumulative dividend at the rates specified. Each holder of Cumulative
 Redeemable Preference Share is entiteld to one vote per share only on
 resolution placed before the company which directly affects rights
 attached to Cumulative Redeemable Preference Share. Since the dividend
 in respect of Cumulative Redeemable Preference Share, has not been paid
 for more than 2 years, Cumulative Redeemable Preference Share holder
 have rights to ten votes per share on every resolution placed before
 the company in a meeting.
 
 1.5 In the event of liquidation of the Company, the holder of
 Cumulative Redeemable Preference Share will have priority over Equity
 share holder in the payment of dividend and repayment of capital.
 
 2.  LONG TERM BORROWINGS
 
 2.1 Debentures, Secured Term Loans and accrued interest are secured by
 way of joint equitable mortgage of fixed assets both present and future
 and hypothecation of all movable assets of the company ranking
 pari-pasu subject to prior charge on the specific assets as referred to
 in Note no. 6.1 below. Debentures for Rs. 332.37 lacs, Secured Term
 Loan for Rs. 740.93 lacs and Accrued Interest there on for Rs. 538.76
 lacs are further guaranteed by some of the Directors and Ex-directors.
 
 2.2 Provision for interest amounting to Rs. 30.38 lacs (up to the year
 Rs. 410.18 lacs) on Optionally Fully Convertible Debentures and accrued
 interest convertible into 16% optionally fully convertible debentures
 (OFCDs) have not been made as the Company expects waiver/relief under
 rehabilitation scheme being submitted to BIFR.
 
 2.3 Provision for interest amounting to Rs. 80.33 lacs (up to the year
 Rs. 486.01 lacs) on public retail 17% non-convertible debentures have
 not been provided as the Company expects waiver/relief under
 rehabilitation scheme being submitted to BIFR.
 
 2.4 Debentures:
 
 i.  17% Non Convertible Debentures (other then Retail) amounting to Rs.
 459.23 lacs were redeemable in yearly (staggering) installments over a
 period of 8 years commencing from April 1,2001. Over the first three
 years from April 1, 2001, 10% of the value of NCDs were to be redeemed
 each year and thereafter from April 1,2004 the balance 70% of the value
 of NCDs were to be redeemed in equal installments over five years.
 Interest in respect of the same has remained unpaid since 1998-99.  
 
 ii.  16% Optionally Fully Convertible Debentures of Rs. 98.14 lacs
 issued were redeemable in 32 quarterly installments commencing from the
 quarter beginning April 1,2001 along with interest accrued thereon. The
 OFCDs holders have right to convert OFCDs in full/part thereof into
 equity shares of the company at par at any time during the currency of
 repayment period. Interest in respect of the same has remained unpaid
 since 1999-2000.
 
 iii.  17% Non Convertible Debentures (Retail) amounting to Rs. 518.19
 lacs were redeemable on completion of 6th, 18th, 30th, 42nd and 54th
 months from maturity date i.e. 28th December, 1998 @ 30%, 15%, 15%, 20%
 and 20% of face value respectively, as per decision taken in the
 meeting of the debenture holders along with interest accrued thereon.
 Interest in respect of the same has remained unpaid since 1998-99.
 
 2.5 Secured Term loan from Financial Institutions carry interest rate
 of 14% p.a. Out of total outstanding, Rs. 1316.66 lacs paid towards
 restructring/settlement, which has been shown as Advance against
 settlement (refer note no. 10) and Rs. 333.38 lacs repayable in
 2013-14 & Rs. 399.96 lacs repayable in 2012-13.
 
 2.6 Secured Term loan from others carry interest rate of 14% p.a. Out
 of total Outstanding, Rs. 918.00 lacs paid towards
 restructring/settlement, which has been shown as Advance against
 settlement, (refer note no. 10) and balance Rs. 542.00 lacs repayable
 in 2012-13.
 
 2.7 Unsecured Term Loan from Financial Institutions carry interest @ 19
 % p.a. and were repayable from 1998-99 in 30 monthly installments.
 Interest in respect of the same has remained unpaid since 1998-99. It
 is guaranteed by some of Directors.
 
 2.8 Public Fixed Deposits carry interest rate of 14 % p.a.
 
 2.9 Company Law Board has passed the order on 21.12.2001 that The
 repayment of fixed deposits shall be made by the company in accordance
 with the revival scheme as and when approved by BIFR under the
 provisions of SICA''. In view of the above, the Company has been advised
 that as the repayment of the matured fixed deposits including interest
 thereon are covered by above referred order and the Draft
 Rehabilitation Scheme (DRS) is pending for consideration before the
 Hon''ble Board for Industrial and Financial Reconstruction (BIFR), the
 same have not remained unclaimed and unpaid within the meaning of
 section 205C of the Companies Act, 1956, However payment on
 compassionate grounds are continued to be made as per decision of the
 committee formed by Hon''ble Company Law Board for this purpose.
 
 2.10 The Company is under Rehabilitation with Hon''ble BIFR under
 provisions of SICA 1985. The Company is in process of submitting
 Draft Revival Scheme (DRS) with Hon''ble BIFR for its approval to make
 the payment to public debenture holders as per DRS in full & final
 settlement of their entire dues on surrender of Original Debenture
 Certificates to the Company. In view of above the Company has been
 advised that Company is not required to deposit unclaimed & unpaid
 redemption amount of debentures and accrued interest thereon to
 Investor Education & Protection Fund under section 205C of the
 Companies Act, 1956.
 
 2.11 Provision for interest amounting to Rs. 120.96 lacs (upto the year
 Rs. 783.90 lacs) on public fixed deposit has not been made as the
 company expects waiver/relief under rehabilitation scheme being
 submitted to BIFR.
 
 2.12 Loans from Corporate bodies do not carry any interest and are
 repayable in 2014-15.
 
 2.13 Compound interest, penal interest & liquidated damages have not
 been considered on all borrowings, amount of which is unascertainable,
 pending confirmation/reconciliation. The Company expects waiver/relief
 under rehabilitation scheme being submitted to BIFR.
 
 2.14 Balances of secured and unsecured lenders have been taken as per
 books and are subject to reconciliation/confirmation pending settlement
 with respective lenders.
 
 3.  TRADE PAYABLES
 
 3.1 The company has not received information from vendors regarding
 their status under the Micro, Small and Medium Enterprises Development
 Act, 2006 hence disclosures relating to amounts unpaid as at year end
 together with interest paid/payable under this Act have not been given.
 
 3.2 Balances of Trade Payable have been taken as per books and are
 subject to reconciliation/confirmation and consequential adjustments,
 if any.
 
 4. TRADE RECEIVABLES
 
 4.1 Trade Receivable includes Rs. 165.40 lacs under litigation
 (Previous year Rs. 336.60 lacs) for which adequate provision has been
 made,
 
 4.2 Balances of Trade Receivable have been taken as per books, are
 subject to reconciliation/confirmation and consequential adjustments,
 if any.
 
 5. TAX EXPENSES
 
 5.1 In view of accumulated losses, provision for taxation for the
 current year has not been made.
 
 5.2 The Company is entitled for set off of carried forward losses and
 unabsorbed depreciation against the future income under the Income Tax
 Act. However as a matter of prudence, the Company is not recognizing
 the deferred tax assets as provided in the Accounting Standard 22
 issued by The Institute of Chartered Accountants of India.
 
 6.  Contingent liabilities not provided for:
 
 a) Guarantee given by the Bank on behalf of the Company Rs. 3.32 lacs
 (Previous year Rs. 3.32 lac).
 
 b) Excise/Custom duty demand disputed by the Company Rs. 41.94 lacs
 (Previous year Rs. 41.94 lacs) against which amount paid Rs. 0.45 lacs
 (Previous year Rs. 0.45 lacs).
 
 c) Value added tax/Central sales tax demand disputed by the Company Rs.
 NIL (Previous year Rs. 6.28 lacs).
 
 d) Claims and liabilities against the Company not acknowledged as debts
 Rs. 198.13 lacs (Previous year Rs. 3.01 lacs).
 
 e) Income tax demand disputed by the Company Rs. 128.09 lacs (Previous
 year Rs. 128.09 lacs) against which appeal is pending.
 
 f) Certain pending labour cases against the Company, for which amount
 is not ascertainable.
 
 g) In respect of restructured debts, future payment obligation are to
 be fulfilled as stipulated, failing which the original liability will
 fall back with interest and penal interest amount of which is not
 ascertainable.
 
 7.  An amount of Rs. 3.81 lacs (net credit) on account of exchange
 difference consequent to the realignment of rupee value in terms of
 foreign currency values of revenue nature is credited/debited to
 respective heads of accounts in Statement of Profit & Loss (Previous
 year Rs. 1.83 lacs).
 
 8.  The Company is a sick company within the meaning of section 3 (1)
 (o) of the Sick Industrial Companies (Special Provision) Act 1985
 (SICA). The Board for Industrial and Financial Reconstruction (BIFR)
 has declared the Company as a sick Company. Accordingly, pending
 approval of rehabilitation proposal, the accounts of the Company have
 been prepared on a going concern basis.
 
 9.  Profit for the year has been arrived at after adjusting prior
 period debits on account of Material cost Rs. 5.07 lacs (Previous year
 Rs. NIL), Administrative expenses Rs. 0.97 lacs (Previous year Rs.
 NIL), Financial expenses Rs. NIL (Previous year Rs. 0.04 lacs) and
 Credits on account of Material cost Rs. NIL (Previous year Rs. 8.24
 lacs).
 
 10.  The Company has only one business segment and catering mainly to
 the domestic market. Its revenue from overseas operations does not
 exceed 10% of the total revenue therefore, the disclosure as per
 Accounting Standard 17 is not applicable to the Company.
 
 11. Related party disclosure as per Accounting Standard 18:
 
 (i) Related party relationships:
 
     (a) Where controls exist:           Modern Terry Towels Ltd.
 
                                         Modern Insulators Ltd.
 
     (b) Key management personnel:       Shri Sachin Ranka
                                         (Chairman & Managing 
                                         Director)
 
     (c) Relatives of key management
         personnel and their
         enterprises Where 
         transactions have taken place:  NIL
 
 (d) Other Associates :                  Shubham Corporate Advisory
                                         Services Pvt. Ltd.
 
 12. The Company has identified the integrated plant for manufacturing
 the fabric as its sole Cash Generating Unit (CGU). There are primary
 indications that the recoverable amount of CGU is less than its
 carrying cost, however no provision has been made for impairment of
 assets as required by Accounting Standard 28 Impairment of assets
 issued by The Institute of Chartered Accountants of India as the
 management is of the view that the recoverable amount is expected to
 improve in due course.
 
 13. Previous year''s figures have been regrouped and rearranged wherever
 necessary, to make them comparable with those of current year. Till the
 year ended 31st March 2011, the company was using pre-revised Schedule
 VI to the Companies Act, 1956, for preparation and presentation of its
 financial statements. During the year ended 31st March, 2012, the
 revised schedule VI notified under the Companies Act, 1956, has become
 applicable to the company. The Company has reclassified previous year
 figures to conform to this classification. The adoption of revised
 schedule VI does not impact recognition and measurement principles
 followed for preparation of financial statement. However, it
 significantly impacts presentation and disclosures made in the
 financial statements, particularly presentation of Balance Sheet.