For the Year ended
                                         30.06.2006       30.06.2005
 
 1 Contingent liabilities                    Nil              Nil
 
 2 Claims against the Company not 
 acknowledged as debt                        Nil              Nil
 
 3 Accounting for Taxes on Income: Deferred Tax is recognised on timing
 differences, keeping in view the matching concept and the principles of
 prudence. The provision for Deferred Tax for the year ended 30.06.2006
 has been computed at Rs.72,46,500/- and is charged
 to Revenue Reserves Deferred Tax assets and liabilities are accounted
 for based on the difference between taxable income and accounting
 income that originate in one period and are reasonably expected to
 reverse in the subsequent periods.
 
 Deferred Tax assets and liabilities are measured using the tax rates
 and laws that have been enacted or substantively enacted as of the
 Balance Sheet date.
 
 4 The Company operates predominantly only in one Business Segment viz.
 Cotton Yarn. The Sales of the Company is mostly in India and there are
 no reportable geographical segments.
 
 5 Confirmation letters to Debtors, Creditors, Advances from Customers
 and Advances to Suppliers have been sent and some of the confirmations
 are yet to be received.
 
 6 The company had negotiated with ICICI Bank and Indian Overseas Bank
 for a one-time settlement of all their dues to them . The company could
 not comply with the terms of OTS and it did not pay any amount as per
 OTS consequently OTS agreement stands cancelled and the excess
 liability written back in earlier years because of OTS had been
 recharged to revenue.  The company had not provided for interest on
 loans amounting to Rs 436.25 lakhs for the year ended 30th June 2006.
 The profit for the year would have been lower by Rs 436.25 lakhs.
 
 7 List of Small Scale Industries to whom the Company Owes Rs.
 4,41,476/- as at 30.06.2006 for more than 30 days.
 
 Anabham Industrial Belts    Chirala Excel Woven Sacks P. Ltd, Hyderabad
 Balaji Beltings, Chirala    Hindustan Paper Products, Rajapalayam
 IMA Universal, Hyderabad    Sharada Plastichem Industries,
                             Delta Plastics,
 Economy Plastics, 
 Machilipatnam               Hyderabad
 BCM Plastics Pvt Ltd, 
 Hyderabad                   Srinivasa Print Pack, Rajamandry
 
 8 Debenture Redemption Reserve was not provided following One Time
 Settlement with ICICI Bank.
 
 9 Dividend on Cumulative Redeemable Preference Shares has not been
 provided for.