The Directors have pleasure in presenting the 12th Annual Report
 together with the Audited Statements of Accounts for the year ended
 30th June 2006.
 
 1.  FINANCIAL RESULTS                 (Rs. In Lakhs)    (Rs.In Lakhs)
                                          2005-06          2004-05
 Sales including other income             3276.63          3416.34
 Profit (Loss) for the year 
 before interest and
 Depreciation                              122.07           404.03
 Less: Interest                              0.50             2.93
 Depreciation                              212.07           211.58
 Net Profit(Loss)                          (90.50)          189.52
 
 2.  PERFORMANCE AND OUTLOOK:
 
 During the year under report the company has achieved a turnover of
 Rs.3276.63 lakhs as against Rs. 3416.34 lakhs during the previous year
 which indicates a decline of about 4.1%.  The performance during the
 year has resulted in a significant loss of Rs. 90.50 Lakhs. As the
 machineries installed are more than 10 years old, company is not able
 to produce the quality yarn which is required in the industry thereby
 it is forced to sale at discount. As there is no cash accrual in the
 business, company is unable to take the step of major repairs and
 overhauling of the machineries.
 
 As the net worth of the company is eroded as at 31/12/2003, your
 company has filed a reference with the Board for Industrial and
 Financial Reconstruction and the same was dismissed on 10th October
 2006 on the ground of non compliance of certain secretarial
 requirements. However the company has already filed an appeal against
 the order of BIFR with AAIFR
 
 Future outlook of the company is discussed in the Management Analysis
 and Discussion Report.
 
 3. DIRECTORS :
 
 Sri G.Rambabu and Sri. M.Anil Kumar directors of the company retire by
 rotation in the ensuing Annual General Meeting and being eligible they
 offer themselves for re- appointment.
 
 4, COMPANY SECRETARY:
 
 Ms. Ruchi Agarwal has resigned as a Company Secretary w.e.f 15.09.2006
 and Ms.  V.Radhika, who is an Associate Member of the Institute of
 Company Secretaries Of India has been appointed in her place as a
 Whole-time Company Secretary w.e.f 31.10.2006
 
 5.AUDITORS :
 
 The Company Auditor Sri G. V. Suryanarayana Murthi, Chartered
 Accountant will retire at the ensuing Annual General Meeting of the
 Company and being eligible offers himself for re-appointment.
 
 6. COST AUDITORS :
 
 Sri.S. P. Sarma, Cost Auditor, Hyderabad has been re-appointed as Cost
 Auditor for the year 2005-06 as per Section 233 (B) of the Companies
 Act 1956.
 
 7. CORPORATE GOVERNANCE:
 
 Your Company has complied with the provisions of the Corporate
 Governance Code as per Clause 49 of the Listing Agreement with the
 Stock Exchanges.
 
 08. EMPLOYEES:
 
 No employee of the Company is covered under the provisions of Section
 217 (2A) of the Companies Act, 1956 for disclosure in this report.
 
 09.  FIXED DEPOSITS :
 
 The Company has not accepted any fixed deposits from the public during
 the year.
 
 10.  QUALIFICATION TO ANY ADVERSE REMARKS IN THE AUDITORS REPORT
 
 There are no adverse remarks in the Auditors Report dated 05-12-2006
 
 11.  CONSERVATION OF ENERGY :
 
 Particulars relating to Conservation of Energy, technology absorption,
 foreign exchange earnings and out go pursuant to the companies
 (Disclosure of particulars in the report of the Board of Directors)
 Rules 1988 are appended separately and it forms part of this Report.
 
 12.  DIRECTORS RESPONSIBILITY STATEMENT:
 
 Pursuant to the requirements under Section 217 (2AA) of the companies
 Act, 1956, with respect to Directors Responsibility statement, it is
 hereby confirmed:
 
 (i) That in the preparation of the accounts for the financial year
 ended 30th June, 2006, the applicable accounting standards have been
 followed along with proper explanation relating to material departures;
 
 (ii) That the Directors have selected such accounting policies and
 applied them consistently and made judgments and estimates that were
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company at the end of the financial year and of the
 loss of the Company for the year under review;
 
 (iii) That 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.
 
 (iv) That the Directors have prepared the accounts for the financial
 year ended 30th June, 2006 on a going concern basis.
 
 13. ACKNOWLEDGEMENTS :
 
 The Directors would like to express their appreciation for the
 assistance and co- operation extended by ICICI and Indian Overseas Bank
 Ltd., to meet the financial needs of the Company. The Directors
 appreciate the services rendered by the officers, staff and workers of
 the Company and expect the same in future also.
 
                                       FOR AND ON BEHALF OF THE BOARD
 
                                                     Sd/-
                                              RA YAP ATI SRINIVAS
                                               MANAGING DIRECTOR
 
 Place : Guntur                                        
 Date  : 05.12.2006