PASUPATI SPINNING & WEAVING MILLS LIMITED

PASUPATI SPINNING & WEAVING MILLS LIMITED

30thANNUAL REPORT

2009 - 10

If undelivered please return to :

PASUPATI SPINNING & WEAVING MILLS LIMITEDHead Office : 1501, Nirmal Tower, 26, Barakhamba Road,New Delhi - 110 001.

BOOK - POST(Under Postal Certificate)


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NOTICE

NOTICE is hereby given that the 30th Annual General Meeting of the Members of the Companywill be held at the Registered Office and Works of the Company at Village Kapriwas (Dharuhera),Distt. Rewari, Haryana on Thursday the 30th September, 2010 at 12.00 Noon to transact thefollowing business :

ORDINARY BUSINESS :1. To receive, consider and adopt the Audited Balance Sheet as at 31st March 2010 and Profit

& Loss Account for the year ended on that date and the Reports of Directors and Auditors thereon.

2. To appoint Director in place of Shri Praveen Paliwal, who retires by rotation and being eligibleoffers himself for re-election.

3. To appoint Auditors and fix their remuneration.

SPECIAL BUSINESS :4. To consider and if thought fit, to pass with or without modification(s), the following Resolution

as an Ordinary Resolution :

“RESOLVED THAT Shri Vidit Jain, who was appointed as an Additional Director by the Boardof Directors of the Company on March 30, 2010, pursuant to Article 117 of the Articles ofAssociation of the Company and who holds office upto the date of this Annual General Meetingunder Section 260 of the Companies Act, 1956 and in respect of whom the Company hasreceived a notice in writing from a member proposing his candidature for the office of Director,be and is hereby appointed as a Director of the Company, liable to retire by rotation.”

BY ORDER OF THE BOARDFor PASUPATI SPG & WVG MILLS LTD.

REGISTERED OFFICEVillage Kapriwas (Dharuhera),Distt. Rewari, HARYANA RAMESH KUMAR JAINDATED : September 04, 2010 CHAIRMAN & MANAGING DIRECTOR

NOTES

1. Member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote insteadof himself. A proxy need not be a member of the Company. Proxies in order to be effective must bereceived by the Company not less than 48 hours before the meeting.

2. The Register of Members and Share Transfer Books of the Company will remain closed from Friday the24th September, 2010 to Thursday the 30th September, 2010 (both days inclusive).

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EXPLANATORY STATEMENTPURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

Item No. 4Shri Vidit Jain, who was working as President of the Company, is looking after the overall operationsof EOU as also the marketing operations of Sewing Thread unit of the Company. The Board ofDirectors in its meeting held on March 30, 2010, appointed him as an Additional Director w.e.f.01.04.2010. In terms of Section 260 of the Companies Act, 1956 and Article 117 of the Articles ofAssociation of the Company, Shri Vidit Jain holds office as Director upto the date of the ensuingAnnual General Meeting of the Company and is eligible for re-appointment as Director.

The Company has received a notice under Section 257 of the Companies Act, 1956 from a memberproposing the candidature of Shri Vidit Jain, for the office of Director. The Board considers thathis association as Director will be beneficial and in the interest of the Company.

The Directors recommend the passing of resolution as set out at Item No. 4 of the accompanyingNotice.

None of the Directors except Shri Vidit Jain and Shri Ramesh Kumar Jain are deemed to beinterested in the said Resolution.


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DIRECTORS' REPORT

TO THE MEMBERSYour Directors present their Report together with the Audited Accounts for the year ended31st March, 2010.

FINANCIAL RESULTS :

For the Year For the Year2009-10 2008-09

(Rs. in Lacs) (Rs. In Lacs)

Sales & Other Income 8896.62 10331.15

Profit before Interest and Depreciation 285.38 505.47

Financial Charges 395.67 673.20

Depreciation 310.36 371.30

(Loss) / Profit before Taxes (420.65) (539.04)

Payment / Provision for Taxes (165.80) 189.12

(Loss) / Profit after Taxation but before extra-ordinary items (254.85) (728.16)

Extra-ordinary items 0.04 7515.18

Impairment of Fixed Assets — (802.22)

Net (Loss) / Profit after extra ordinary items (254.81) 5984.80

OPERATIONS :During the year under review, your company achieved Sales Turnover of Rs. 8896.62 Lacs as againstRs. 10331.15 Lacs in the previous year. The turnover is lower as production activities of company’sEOU unit at Dharuhera remained suspended during the year, which was partly operational inprevious year. However the turnover of Sewing Thread Unit has gone up from Rs. 7110.33 Lacsto Rs. 7451.28 Lacs showing a marginal increase of about 5%. The company incurred Net loss(before extra-ordinary items) of Rs. 254.85 Lacs as against loss of Rs. 728.16 Lacs during theprevious year.

The working of our Sewing Thread unit during the year 2009 -10 has improved marginally. Thecompany is continuously trying to shift its production base to more value added items, which hasstarted yielding favourable results. The export realisation has also started improving due to overallimprovement in international scenario. The full impact of the same should be visible in company’sperformance during 2011-12. However, recently the capacity utilization has been adversely affecteddue to labour shortage. The company is trying its level best to overcome this problem by participatingin jobfairs and also by recruiting apprentice / trainees.

The production activities at company’s EOU unit at Dharuhera remained suspended during the year.However, knitting and garments unit at Dharuhera is working smoothly and improving every month.We are now supplying garments for various reputed brands like Big Bazar, Pantaloon, RelianceRetail, Le Coopers etc.

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SETTLEMENT WITH FINANCIAL INSTITUTIONS :SASF(IDBI), the only major term lender has assigned its outstanding debt in favour of J.M. FinancialAsset Reconstruction Company Private Limited (JMFARC) on 19th March 2010. Further, JMFARChas also agreed in principle to restructure the outstanding debt on certain terms and conditions,which are subject to approval by BIFR.

REFERRING THE COMPANY TO BOARD FOR INDUSTRIAL & FINANCIAL RESTRUCTURING :As mentioned in the last years report, the Company was declared a sick industrial company withinthe meaning of Section 3 (1) (o) of the Sick Industrial Companies (Special Provisions) Act, 1985on 14.07.2005 and Bank of Baroda was appointed as operating agency (OA) to examine viabilityof the company and formulate rehabilitation scheme. OA has since completed its examination andalso submitted a Draft Rehabilitation Scheme to BIFR for its approval.

DIVIDEND :In view of non-availability of distributable profits, the Board of Directors is not in a position torecommend any dividend for the year under review.

DIRECTORS’ RESPONSIBILITY STATEMENT PURSUANT TO SECTION 217 (2AA) OF THE COMPANIESACT, 1956 :

Your Directors hereby confirm that :i) in the preparation of the annual accounts, the applicable accounting standards had been

followed along with proper explanation relating to material departures.

ii) the directors had selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profit or lossof the Company for the period.

iii) the directors had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of the companyand for preventing and detecting fraud and other irregularities.

iv) the directors had prepared the annual accounts on a going concern basis.

INDUSTRIAL RELATIONS :Industrial relations continued to be cordial during the year under review.

STATEMENT PURSUANT TO LISTING AGREEMENT(S) :The Company’s securities are listed at Mumbai Stock Exchange & Delhi Stock Exchange and theCompany has paid Annual Listing Fee to Mumbai Stock Exchange for the year under review & forthe current year.

CORPORATE GOVERNANCE :A report on the implementation of Corporate Governance is enclosed which forms a part of Directors’Report.

DIRECTORS :Shri Praveen Paliwal was co-opted as Director on the Board of the Company with effect from18.05.2009.


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Shri Deepak Gupta (IDBI Nominee) ceased to be a Director of the Company with effect from23.09.2009 as his nomination was withdrawn by IDBI. The Directors place on record theirappreciation for the valuable services rendered by him during his tenure.

Shri Vidit Jain was co-opted as Director on the Board of the Company with effect from 01.04.2010and also appointed as Executive Director.

AUDITORS’ REMARKS :The observations as referred to in the Auditors’ Report are self-explanatory and, therefore, do notcall for any further comments.

ADDITIONAL INFORMATION :Energy conservation measures, progress made in technology absorption and foreign exchangeearning and outgo, as required by the Companies (Disclosure of Particulars in the Report of theBoard of Directors) Rule, 1988 is annexed and form part of this Report.

ACKNOWLEDGEMENT :Your Directors wish to place on record their deep appreciation of the continued support and co-operation received from All India Financial Institutions, Banks, Central and Statement Governments,dealers and customers of the Company.

For and on behalf ofThe Board of Directors

PLACE : NEW DELHI RAMESH KUMAR JAINDATED : SEPTEMBER 4, 2010 CHAIRMAN & MANAGING DIRECTOR

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CORPORATE GOVERNANCEINTRODUCTIONThe Securities and Exchange Board of India has introduced a Code of Corporate Governance (Code)by way of amendment to the listing agreements with the Stock Exchanges. The Company hascomplied with the mandatory requirements of the Code.

(I) Company’s Philosophy on Corporate Governance :The philosophy of the Company is to enhance the long-term economic value of the Company,its stake holders and the society at large by adopting better-corporate practices in fair andtransparent manner by aligning interest of the Company with its shareholders and other keystake holders.

(II) Board of Directors :a) The total strength of the Board as on 01.04.2009 was 3 Directors comprising of 2 (two)

Executive Directors and 1 (one) Non-executive (Nominee) Director. During the year01.04.2009 to 31.03.2010, there was change in the directorship as Shri Praveen Paliwalwas co-opted as Director w.e.f. 18.05.2009. Shri Deepak Gupta (IDBI Nominne) ceasedto be a Director of the Company with effect from 23.09.2009 as his nomination waswithdrawn by IDBI.

b) During the year ended 31.03.2010, 7 (seven) Board Meetings were held with at least onemeeting in every quarter on 28.04.2009, 01.06.2009, 04.09.2009, 30.09.2009, 05.10.2009,10.03.2010 & 30.03.2010.

Statement of Attendance of each Director at the Board Meetings held during the Year andLast AGM :

S. Name of the Executive / No. of No. of Attendance atNo. Director Independent / Non Meetings Meetings last AGM

executive / Nominee held Attended on 29.09.2009

1. Shri Ramesh Kumar Jain Chairman & 7 7 PresentManaging Director

2. Shri S.K. Chhajer Whole Time Director 7 7 Not present

3. Shri Deepak Gupta IDBI Nominee 3 3 Not present

4. Shri Praveen Paliwal Director 6 6 Not present

Details of Board Meetings held during the year :

S. No. Date Board Strength No. of Directors Present

1 28.04.2009 3 3

2 01.06.2009 4 4

3 04.09.2009 4 4

4 30.09.2009 3 3

5 05.10.2009 3 3

6 10.03.2010 3 3

7 30.03.2010 3 3


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Number of Directorship on other Boards & Membership / Chairmanship of Committees ofother Boards as on 31.03.2010.

S. No. Name of Director No. of Membership of Chairmanship ofDirectorship in Committees of Committees ofOther Boards Other Boards Other Boards

1. Shri Ramesh Kumar Jain 1 NIL NIL

2. Shri S.K. Chhajer NIL NIL NIL

3. Shri Deepak Gupta, Not Applicable Not Applicable Not ApplicableIDBI Nominee

4. Shri Praveen Paliwal NIL NIL NIL

(III) Audit Committee :The strength of the Audit Committee as on 01.04.2009 was three members i.e. Shri DeepakGupta (Nominee IDBI) as Chairman, Shri Ramesh Kumar Jain & Shri S.K. Chhajer as Members.The role, terms of reference, authority and powers of the Audit Committee are in conformitywith the listing agreement and as prescribed under Section 292 A of the Companies Act, 1956.The Company Secretary is the Secretary of the Audit Committee. Shri Praveen Paliwal was co-opted as Member of the Committee w.e.f. 18.05.2009. Shri Deepak Gupta ceased to be aChairman / Member of the Committee w.e.f. 23.09.2009 as his nomination was withdrawn byIDBI and Shri Praveen Paliwal was appointed as Chairman of the Audit Committee with effectfrom 23.09.2009.

Composition and Attendance at the Audit Committee Meetings :

Date of the Composition Attendance ChairmanMeetings (Yes / No)

28.04.2009 1. Shri Deepak Gupta, Chairman YES Shri Deepak Gupta2. Shri Ramesh Kumar Jain, Member YES3. Shri S.K. Chhajer, Member YES

01.06.2009 1. Shri Deepak Gupta, Chairman YES Shri Deepak Gupta2. Shri Ramesh Kumar Jain, Member YES3. Shri S.K. Chhajer, Member YES4. Shri Praveen Paliwal, Member YES

04.09.2009 1. Shri Deepak Gupta, Chairman YES Shri Deepak Gupta2. Shri Ramesh Kumar Jain, Member YES3. Shri S.K. Chhajer, Member YES4. Shri Praveen Paliwal, Member YES

05.10.2009 1. Shri Praveen Paliwal, Chairman YES Shri Praveen Paliwal2. Shri Ramesh Kumar Jain, Member YES3. Shri S.K. Chhajer, Member YES

30.03.2010 1. Shri Praveen Paliwal, Chairman YES Shri Praveen Paliwal2. Shri Ramesh Kumar Jain, Member YES3. Shri S.K. Chhajer, Member YES

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(IV) Remuneration Committee :The strength of the Remuneration Committee as on 01.04.2009 was two members i.e.Shri Deepak Gupta (Nominee IDBI) as Chairman, Shri S.K. Chhajer as Member. Shri PraveenPaliwal was co-opted as Member of the Committee w.e.f. 18.05.2009. Shri Deepak Gupta ceasedto be a Member w.e.f. 23.09.2009 as his nomination was withdrawn by IDBI. The role, termsof reference, authority and powers of the Remuneration Committee are in conformity with thelisting agreement and as prescribed under the Companies Act, 1956. The Company Secretaryis the Secretary of the Remuneration Committee. 2 meetings of Remuneration Committee wereheld on 04.09.2009 & 30.03.2010 during the year under review.

Composition and Attendance at the Remuneration Committee Meetings :

Date of the Composition Attendance ChairmanMeetings (Yes / No)

04.09.2009 1. Shri Deepak Gupta, Chairman YES Shri Deepak Gupta2. Shri S.K. Chhajer, Member YES3. Shri Praveen Paliwal, Member YES

30.03.2010 1. Shri Praveen Paliwal, Member YES Shri Praveen Paliwal2. Shri S.K. Chhajer, Member YES

– Details of remuneration / sitting fees paid to the directors :Amount (Rs.)

Sl. Name of the Director Description of Salary Perquisites Sitting TotalNo. Transaction Fee

1 Shri Ramesh Kumar Jain Remneration – 67557 – 67557Chairman & Mg. Director & perquisites

2 Shri S.K. Chhajer Remneration 219990 84408 – 304398Whole Time Director & perquisites

3 Shri Praveen Paliwal Remneration – – 3000 3000Director & perquisites

4 Shri Deepak Gupta Remneration – – 1500 1500Director (IDBI Nominee) & perquisites

(V) Share / Debenture Transfer-cum-Shareholders’ / Investors’ Grievance Committee :As on 01.04.2009 the Share / Debenture Transfer-cum-Shareholders’ / Investors’ GrievanceCommittee consisted of two members – Shri Ramesh Kumar Jain & Shri S.K. Chhajer. TheCommittee was vested with the requisite power and authority to specifically look into theredressal of the shareholders’ / Investors’ Grievance. During the year ending 31.03.2010,36 Meetings of Share / Debenture Transfer-cum Shareholders’ / Investors’ Grievance Committeewere held. The Details of attendance of Members are as under :

S. No. Name of Member No. of Meetings Held No. of Meetings attended

1. Shri Ramesh Kumar Jain 36 36

2. Shri S.K. Chhajer 36 36

No complaint was received during the year ended on 31.03.2010.


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(VI) Annual General Meetings :Location and time for the last three AGM’s

Year Date Venue Time

2007 29.09.2007 Village Kapriwas (Dharuhera) 12.00 NoonDistt. Rewari, Haryana



No postal ballots resolutions were passed.

(VII) Disclosures :(a) Related Party Transactions :

Transactions of material nature with Directors / Promoters / their relatives have beendisclosed in Note No. 12 on Schedule 21 of the Annual Accounts.

(b) Compliance by the Company :The Company has complied with the requirements of the Stock Exchanges, SEBI and otherStatutory Authorities on all matters related to capital market during the last three years.No penalties or strictures have been imposed on the Company by the Stock Exchangeor SEBI or any other Statutory Authority relating to the above.

(VIII) Means of Communication :

Half Yearly Report to each household of shareholders :The Company has not yet started sending the half-yearly reports to each household ofShareholders. But if any shareholder seeks any information, then the same is provided by theCompany.

Quarterly Results :Quarterly results are published in English and Hindi Newspapers as per the requirement oflisting agreement with the Stock Exchanges. The same are also faxed to the Stock Exchangeswhere the company is listed. Results of September 2009, December 2009 and March 2010quarters have not been published.

Presentation made to institutional investors or to analysts :Meetings are held with the financial institutions. They are also provided with a copy of financialresults.

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Distribution of Shareholding as on 31.03.2010 :

Shareholding %age

A. Promoters’ holding including their relativesAssociate Companies 3689735 52.29

B. Non-Promoters Holding—Directors 900 0.01— Institutional Investors

Financial Institutions, Banks, Mutual Funds etc. 25705 0.36—Private Corporate Bodies 1540966 21.83—Public 1799200 25.51

7056506 100.00

Plant Location :Polyester Viscose Yarn & Cotton Yarn Unit : Village Kapriwas (Dharuhera)

Distt. Rewari, Haryana

Sewing Thread Unit : Village Kheri (Kala-amb)Distt. Sirmour, H.P.

(IX) Shareholders information :A. Annual General Meeting :

Day, Date & Time : Thursday the 30th September, 2010 at 12.00 NoonVenue : Registered Office of the Company at

Village Kapriwas (Dharuhera) Distt. Rewari, Haryana

B. Book Closure : From Friday the 24th September, 2010 to Thursday the30th September, 2010 (both days inclusive)

C. Registrar & Transfer Agents :M/s. Skyline Financial Services Pvt. Ltd., D - 153A, Ist Floor, Okhla Industrial Area,Phase - I, New Delhi - 110020 are the Registrar and Transfer Agents of the Company forphysical and demat segments.

D. Dematerialisation of Shares and Liquidity :79.55% of the total share holdings of equity shares have been dematerialized up to31.03.2010. Trading in Company’s shares is permitted only in de-mat form w.e.f. 06.09.2000as per notification issued by the Securities & Exchange Board of India.

E. Listing at Stock Exchanges :The details regarding payment of listing fee to Stock Exchanges are given below :

Sl. Name of Stock Exchanges Listing Fee Stock CodeNo. Paid up to No.

1. Delhi Stock Exchange Association Ltd 2004-05 A-2

2. The Stock Exchange, Mumbai 2010-11 A-1

Market Price data : High / Low during the year :In view of the suspension of trading in the scrips by Mumbai Stock Exchange and no tradingin Delhi Stock Exchange, market data has not been provided.

However, requisite steps have been taken to get revoked the suspension of trading byMumbai Stock Exchange.


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MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT / OUTLOOK ON THREATS, RISKS ANDCONCERNS :After facing unprecedented slowdown due to world wide recession during last two years, the textileindustry is recovering and has started showing signs of growth. The domestic demand is pickingup and exports have also started taking off.

The working of our Sewing Thread unit during the year 2009 -10 has improved marginally. Thecompany is continuously trying to shift its production base to more value added items, which hasstarted yielding favourable results. The export realisation has also started improving due to overallimprovement in international scenario. The full impact of the same should be visible in company’sperformance during 2011-12. However, recently the capacity utilization has been adversely affecteddue to labour shortage. The company is trying its level best to overcome this problem byparticipating in jobfairs and also by recruiting apprentice / trainees.

As already informed that our sewing thread has been approved by various reputed internationalbrands such as GAP, BENETTON, MEXX/LIZ CLAIBORNE, NIKE, NEXT (NSL), REEBOK-INDIA,MONDIAL (C&A), THE CHILDREN’S PLACE- TCP, ADIDAS (INDIA), SPIRE, OSHO, LACOSTE (Sports& Leisure Apparels-Trial) GEORGE (IMPULSE), DEBENHAMS (IMPULSE), NEXT (Impulse) & ESPIRITOutlet (Impulse). In order to cater increased domestic demand of value added products, we arealso importing two machines with a capital cost of Rs. 1.50 Crore, which are expected to becommissioned by end of 2010, which in turn will improve profitability.

The production activities at company’s EOU unit at Dharuheara remained suspended during theyear. However, knitting and garments unit at Dharuhera is working smoothly and improving everymonth. We are now supplying garments for various reputed brands like Big Bazar, Pantaloon,Reliance Retail, Le Coopers etc.

Segment-wise performance :Company is only manufacturing textile and textile articles and therefore, segment reporting is notapplicable to the Company.

Internal Control Systems and Adequacy :In order to strengthen internal control systems, M/s. M.C. Jain & Co., Chartered Accountants wasappointed as Internal Auditors of the Company for the year 2009 -10.

Financial performance :The financial performance of the company has been given separately in the Directors’ Report.

Human Resources :The key resource for your Company has been its people. Your Company has been able to createa favorable work environment that motivates performance, customer focus and innovation whileadhering to the highest degree of integrity.

Industrial relations have continued to be harmonious at all the units throughout the year.

CEO / CFO Certificate :The requisite certificate has been obtained from the CEO / CFO of the Company.

For and on behalf ofThe Board of Directors

PLACE : NEW DELHI RAMESH KUMAR JAINDATED : 4th September, 2010 CHAIRMAN & MANAGING DIRECTOR

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CONSERVATION OF ENERGY

a) Energy Conservation Measures Taken :1. Maximum utilisation of natural light in place of tube-light.

2. Adjusted the angle of fan blades at optimum level to maintain the humidity at minimumpower consumption.

3. Adjusted the blades of S.A. & R.A. Fans at H. Plants to maintain humidity with minimumpower consumption.

4. Some innovative modifications carried out in machine to reduce down the given load - suchas simplex pneumatic suction motor stopped by introducing under clearer.

5. By changing the filter media of filtration plant the filtration efficiency improved and thusreduced the load, on suction fans and effected on energy saving.

6. Optimising the Humidification plants saturation efficiency the load on supply air fan andwater pumps reduced.

7. By modifying the compressed air line consumption of compressed air reduced thus resultedin energy saving.

8. We have replaced old receprocative compressor with new screw compressor having highefficiency & low consumption of power. There would be 10-15% power saving in compressorunits.

9. We have obtained additional sanction of 1000 KVA load during peak hours from HPSEBresulting reduction in P.U. cost of power.

10. The new generation air-compressor is added to save the power consumption as well asmaintenance cost.

11. Some modifications carried out in our Humidification Plant provided the stationary V NotchType Filter in place of Rotary filter and save 3.2 KW/Hrs.

12. Optimize the power voltage and reduce the energy consumption.

13. Optimize the compressed air pressure by reducing from 9.5 Kgs to 8 Kgs and save thepower.

14. Over-head cleaner travelling frequency reduced by 3 to 4 minutes in all Ring Frames andachieved the conservation in this area.

15. Plugged all air leakage, hence saving of air results power saving.

16. By installing power capacitors near to load to achieve higher power factor.

17. By replacing conventional Tube-lights with new energy saving (TS) Tube-lights.

18. By maintaining Power Factor 11-100% and getting rebates on electricity bill.

19. By providing transparent sheets at Godowns for maximum utilisation of natural day light.

20. By installing Online Energy Monitoring System in our power house, which helped us tomake power saving (approx 5 – 10%).

b) Additional Investment Proposals, if any, being implemented for Saving Energy :NIL

c) Impact of the Measures for Reduction of Energy Consumption and Conversant Impact onthe Cost of Production of Goods :The above measures have resulted in saving of energy and to that extent the cost hadreduced.


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Form A :Current Previous

Year Year1. Electricity

A) Power and Fuel Consumptiona) Purchased Units 25363693 27953383

Total Amount Paid (Rs.) 90165077 103828421Rate / Unit (Rs.) 4.80 3.71

b) Own generated through Diesel Generators (Units) 420505 574305Rate of Diesel / HFO (Rs. / Ltr.) 28.75 32.56Cost/Unit (Rs.) 8.06 10.13

2. Coal Used in BoilerQuantity (MT) 1777.301 1315.688Total Cost (Rs.) 9298310 7347510Average Cost per MT (Rs.) 5231.70 5584.54

B) Consumption per Unit of ProductionProduction of Yarn (MT) 4464.094 5720.543Electricity (KWH / Ton) 5681.71 4886.49Coal (Kg / Ton) 465.21 229.99Others (Diesel / HFO Ltr. / Ton) 26.41 31.22

Form B : TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENTSpecific areas in which R & D carried out by the Company :

1) Developed Cotton / Woollen Yarn

2) Developed Bamboo Fibre Yarn

3) Developed Polyester / Woollen Yarn

4) Well equipped quality control lab with premier art, premier classic, evenness tester, cascadeand TPI Tester. Latest addition is premier classic, which helps to optimise yarn formingprocesses and electronic clearers of winding.

BENEFITS ARRIVED AS A RESULT OF R&DWith developing different type of yarn, there is a value addition, hence increase in margins.

With the addition of Premier art and classimate, the quality of yarn is adjudged and controled,results in increase in Export of yarn.

FUTURE PLAN OF ACTIONR&D is being carried out for developing new product range from cotton and polyester fibressuch as compact yarn.

Further, R&D activities will continue and more efforts will be made towards new innovationsand diversifications of the product range for optimisation of process for improving quality andproductivity as well.

FOREIGN EXCHANGE EARNING AND OUTGO In RupeesCurrent Year Previous Year

Total Foreign Exchange earned (on FOB basis) 252207987 279800369Total Foreign Exchange used 4550021 14211230

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AUDITORS' CERTIFICATE

We have examined the compliance of conditions of corporate governance by PASUPATI SPINNING& WEAVING MILLS LIMITED for the year ended on 31st March, 2010, as stipulated in clause 49of the listing agreement of the said company with stock exchange(s).

The compliance of conditions of corporate governance is the responsibility of the management.Our examination was limited to procedures and implementation thereof, adopted by the companyfor ensuring the compliance of the conditions of corporate governance. It is neither an audit noran expression of opinion on the financial statement of the company.

In our opinion and to the best of our information and according to the explanations given to us,subject to the following :

i) Listing agreement requires that the board should comprise of not less than fifty percent non-executive directors. However, during the year number of non-executive directors on the boardwere less than fifty percent.

ii) Listing agreement requires that in case of an executive chairman, at least half of the boardshould comprise of independent directors. However, during the year the number of independentdirectors on the board were half only during the period from 18.05.2009 to 22.09.2009.

iii) Listing agreement requires that there shall be maximum time gap of four months between anytwo Board meetings. However, Board meeting was held on 10.03.2010 after 05.10.2009.

iv) Listing agreement requires that quarterly result of the company should be placed before theboard of directors within one month of the end of the quarter. Quarterly results have not beenplaced before the audit committee / board of directors within one month of the end of eachquarter.

v) Listing agreement requires that the code of conduct laid down for all board members and seniormanagement of the company, shall be posted on the website of the company which has notbeen complied with.

vi) Listing agreement requires that two-thirds of the members of audit committee should beindependent directors. However, during the year two- third of the members of audit committeewere not independent directors.

vii) Listing agreement requires that the chairman of the audit committee shall be present at theannual general meeting to answer shareholder queries. However, the chairman of the auditcommittee was not present in the annual general meeting held on 29.09.2009.

viii) Listing agreement requires that not more than four months shall elapse between two AuditCommittee meetings. However, Audit Committee meeting was held on 30.03.2010 after05.10.2009.

ix) Listing agreement requires that the quorum of the audit committee meeting shall be minimumof two independent directors. However, two independent directors were not present in meetingsof audit committee held on 28.04.2009, 05.10.2009 and 30.03.2010.

x) Listing agreement requires that a shareholders / investors grievance committee be formed underthe chairmanship of a non-executive director. However the chairman of share / debenture transfer


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cum shareholders / investor’s grievance committee of the company is not a non-executivedirector.

xi) Quarterly results have neither been put on the company’s web site nor sent to the StockExchange or published in newspapers after the quarter ended June, 2009.

xii) Annual listing fees payable to Delhi Stock Exchange Association Limited has not been paidfor the financial year 2005-06 to 2009-10.

We certify that the company has complied with the conditions of corporate governance as stipulatedin the above mentioned listing agreement.

We state that such compliance is neither an assurance as to the future viability of the companynor the efficiency or effectiveness with which the management has conducted the affairs of thecompany.

For B.K. SHROFF & CO.,Chartered Accountants

Place : New Delhi O.P. SHROFFDated : 4th September, 2010 Partner

Membership No. 06329

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AUDITORS' REPORT

To the Members,

1. We have audited the attached Balance Sheet of M/s. PASUPATI SPINNING & WEAVING MILLSLIMITED as at 31st March, 2010 and also the Profit and Loss Account and the cash flowstatement for the year ended on that date annexed thereto. These financial statements arethe responsibility of the Company’s management. Our responsibility is to express an opinionon these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India.Those Standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order, 2003 as amended by the Companies(Auditors’ Report) (Amendment) order, 2004, issued by the Central Government of India in termsof subsection (4A) of Section 227 of the Companies Act, 1956 we enclose in the Annexurea statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Further to our comments in the annexure referred to above, we report that :

i. We have obtained all the information and explanations which to the best of our knowledgeand belief were necessary for the purpose of our audit.

ii. In our opinion, proper books of account, as required by law have been kept by the Company,so far as appears from our examination of the said books.

iii. The Balance Sheet, Profit and Loss Account and cash flow statement dealt with by thisreport are in agreement with the books of account.

iv. In our opinion the Balance sheet, Profit & Loss Account and cash flow statement dealtwith by this report comply with the Accounting Standards referred to in subsection (3C)of Section 211 of the Companies Act, 1956, subject to our observations in paragraph (vi)below.

v. As per information and explanations given to us, we report that as on 31.3.2010 none ofthe directors of the company are disqualified from being appointed as a director of thecompany under Section 274((1)(g) of the Companies Act, 1956. As the company has notredeemed its debentures on due dates and as the default continues for more than a year,all directors of the company are not qualified for being appointed as directors of any otherpublic company in terms of provision of Section 274(1)(g) of the Companies Act, 1956as amended by the Companies Amendment Act, 2000.

vi. Reference is drawn to :(a) Note No. 4 on Schedule 21 relating to accounts of the company for the year-ended

31.03.2010 having been prepared on the basis that the company is a going concern.

(b) Note No. 5 on Schedule 21 relating to assignment of outstanding dues of IDBI / SASFin favour of JMFARC. As the terms and conditions of dues of JMFARC are yet to befinalized by BIFR, the accounts have been prepared as per terms and conditions


17

agreed to with IDBI / SASF. The effect thereof on the loss for the year cannot bedetermined.

(c) Note No. 6(g) on Schedule 21 relating to non-provision of interest on 14% and 15%redeemable partly convertible debentures amounting to Rs. 20339120 (includingRs. 18338237 for earlier years) resulting in the loss for the year before tax and securedloans to be lower by the said amount.

(d) Note No. 9 on Schedule 21 relating to non provision of Debenture Redemption Reserveamounting to Rs. 1674150 which has no effect on the loss for the year before tax.

(e) Note No. 23(iii) on Schedule 21 relating to payment of remuneration of Rs. 3090 toShri S.K. Chhajer, Whole time director, for the period from 29.03.2010 to 31.03.2010for which approval of Central Government is awaited resulting in the loss before taxfor the year to be overstated and Cash & Bank Balance to be understated by the saidamount.

(f) We further report that had the observations made by us in paragraph vi(c) and vi(e)above been considered, the loss for the year before tax would have been Rs. 62396971(as against the reported figure of Rs. 42060941), secured loans would have beenRs. 719147328 (as against the reported figure of Rs. 698808208) and cash & bankbalance would have been Rs. 29093118 (as against the reported figure ofRs. 29090028).

Subject to the above, in our opinion and to the best of our information and accordingto the explanations given to us, the said accounts read together with other notesappearing in Schedule 21 give the information required by the Companies Act, 1956,in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India :

i) in the case of the Balance Sheet, of the state of affairs of the Company as at31st March, 2010; and

ii) in the case of the Profit and Loss Account, of the loss for the year ended on thatdate; and

iii) in the case of cash flow statement, of the cash flow for the year ended on thatdate.


Firm Registration No. 302166E

3/7-B, Asaf Ali Road,New Delhi-110 002. O.P. SHORFFDated : 4th September, 2010 Partner


18

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE

(i) (a) The company has maintained proper records showing full particulars including quantitativedetails and situation of fixed assets.

(b) As explained to us, all the fixed assets have been physically verified by the managementaccording to a regular program which in our opinion is reasonable having regard to thesize of the company and the nature of its assets. No material discrepancies with respectto book records were noticed on such verification.

(c) In our opinion and according to explanations given to us, fixed assets disposed off duringthe year were not substantial and as such the disposal has not affected the going concernconcept of the company.

(ii) (a) As explained to us, physical verification of inventory (except material in transit and lyingwith third parties) has been conducted by the management at reasonable intervals. Inour opinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventories followed by themanagement are reasonable and adequate in relation to the size of the company andnature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion thatthe company is maintaining proper records of inventory. Discrepancies noticed onverification of inventory as compared to book records were not material and these havebeen properly dealt with in the books of accounts.

(iii) The company has neither granted nor taken any loans, secured or unsecured, to / fromcompanies, firms or other parties covered in the register maintained under section 301 ofthe Companies Act, 1956 and hence paragraph (iii)(a) to (iii)(g) of the aforesaid order arenot applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there areadequate internal control procedures commensurate with the size of the company and thenature of its business with regard to purchase of inventory and fixed assets and for the saleof goods and services. No major weakness in the internal control system was observedduring the course of audit.

(v) According to the information and explanations given to us, during the year there were notransactions that need to be entered into the register maintained under section 301 of theCompanies Act, 1956. Accordingly, paragraphs v (a) and (b) of the aforesaid order are notapplicable.

(vi) In our opinion and according to the information and explanations given to us, the companyhas not accepted any deposits from public as per provisions of sections 58A, 58AA or anyother relevant provisions of the Companies Act, 1956 and the Companies (Acceptance ofDeposit) Rules 1975. No order has been passed by the Company Law Board or NationalCompany law Tribunal or Reserve Bank of India or any court or any other Tribunal.

(vii) In our opinion, the company has an internal audit system commensurate with the size andthe nature of its business.

(viii) We have broadly reviewed the books of account maintained by the company pursuant to theorder made by the Central Government for the maintenance of cost records under section


19

209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However, we have notmade a detailed examination of such accounts and records.

(ix) (a) According to the records of the company, the company is not regular in depositing withthe appropriate authorities undisputed statutory dues including Provident Fund, InvestorEducation and Protection Fund, Employees State Insurance, Income Tax, Wealth Tax,Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it.According to information and explanations given to us the undisputed amounts outstandingas at 31st March, 2010 for a period of more than six months from the date they becamepayable are as under :

Name of the Statue Nature of dues Amount Period to whichRs. amount relates

Sales Tax Haryana Sales Tax 110525 April’ 2009to September 2009

Sales Tax Chennai Sales Tax 120461 March’ 2008

Sales Tax Haryana Demand 567396 2006-07

Sales Tax Mumbai Sales Tax 198277 August’ 2009

Central Excise Act Excise Duty 27555087 April’ 84 to Oct.’ 93

(b) According to the records of the company, dues in respect of Sales Tax / Income Tax /Customs Duty / Wealth Tax / Service Tax / Excise Duty / Cess which have not beendeposited on account of any dispute are as under :

Name of Nature of dues Amount Forum where pendingthe Statue Rs.

Haryana Value VAT 4407602 Joint Excise & TaxationAdded Tax Act Commissioner

(x) As at 31.03.2010 the accumulated losses of the company are more than fifty percent of itsnet worth. The company has incurred cash losses during the financial year covered by ouraudit. Cash loss was not incurred in the immediately preceding financial year.

20

(xi) The company has defaulted in payment of dues to financial institutions, banks and debentureholders. Details as per company ’s books of accounts are as under :

Name of Institution / Bank Nature of Dues Due Dates Remarks

Principal InterestRs. Rs.

Debentures — 14% 2407547 21.12.19992427614 21.12.2000

432054 Since 30.09.19986769226 Since 01.04.2000 Not provided in

Books of Accounts(Refer Note No. 6(g)in Schedule 21)

Debentures — 15% 2894911 09.12.20002894911 09.12.20013256775 09.12.2002

1138090 Since 30.09.199813569894 Since 01.04.2000 Not provided in

Books of Accounts(Refer Note No. 6(g)in Schedule 21)

Debentures — 19% 1666666 03.01.20001666667 03.01.20011666666 03.01.2002

48405390 Since 03.01.2000

Note : Does not include amount for which one time settlement (OTS) has been negotiatedwith the lenders and repayment of dues has been rescheduled and payments are being madeas per reschedulement. (Refer Note No. 5(d) and 6 (d) on Schedule 21).

The limits with banks were overdrawn for most of the year and were within limits for theremaining part of the year. The overdrawn limits as on 31.03.2010 are as under :

Nature of Limit Name of the Bank Limit Balance as Excess Remarksper Banks

(Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs)

Demand Loan Nainital Bank Limited 27.40 27.55 0.15 BorrowingsState Bank of Travancore 82.20 83.05 0.85 in excessCanara Bank 98.00 98.04 0.04 of limitBank of Baroda 136.00 137.39 1.39

Packing Credit Canara Bank 277.00 282.01 5.01

Cash Credit ING Vysya Bank Ltd. 6.05 6.07 0.02Canara Bank 225.00 226.10 1.10State Bank of Travancore 375.80 378.25 2.45Nainital Bank Limited 75.60 75.61 0.01

Nature of Limit Name of the Bank Amount Due RemarksOverdue Date

(Rs.)

Bill Discounted / State Bank of Patiala 3305946 15.03.2010 Payment pending on due datePurchased Bank of Baroda 952826 19.03.2010

2180455 12.02.20102001527 19.03.20103501264 23.03.20102343440 23.03.2010


21

(xii) Based on our examination of documents and records maintained by the company, we areof the opinion that since the company has not granted any loan and advance on the basisof security by way of pledge of shares, debenture and other securities, it is not requiredto maintain records in respect thereof.

(xiii) In our opinion the company is neither a chit fund nor nidhi / mutual benefit fund / society andhence paragraph 4 (xiii) of the aforesaid order is not applicable.

(xiv) In our opinion the company is not dealing in or trading in shares, securities, debenturesand other investments and accordingly the provisions of paragraph 4(xiv) of the aforesaidorder is not applicable.

(xv) Based on our examination of the records we are of the opinion that the company has notgiven any guarantee for loans taken by others from banks or financial institutions.

(xvi) In our opinion, term loans received during the year have been applied for the purpose forwhich they were obtained.

(xvii) According to the information and explanations given to us and on an overall examinationof the balance sheet of the company, we report that during the year net long term investmentsof Rs. 1643370 has been made from funds raised on short term basis.

(xviii) During the year the company has not made any preferential allotment of shares to partiesand companies covered in the register maintained under section 301 of Companies Act,1956.

(xix) During the year the company had not issued any debentures. The company has createdsecurity or charge in respect of debentures issued in earlier years.

(xx) During the year under review no money was raised by public issue.

(xxi) During the course of our examination of the books and records of the company, carried outin accordance with auditing standards generally accepted in India, we have not come acrossany instance of fraud by the company or on the company, noticed or reported during theyear. We have also not been informed of any such case by the management.


Firm Registration No. 302166E3/7-B, Asaf Ali Road,New Delhi-110 002. O.P. SHROFFDated : 4th September, 2010 Partner


22

Schedules Current Year Previous YearRs. Rs.

SOURCES OF FUNDS

SHAREHOLDERS’ FUNDSShare Capital 1 57065060 57065060Reserves & Surplus 2 137812337 194877397 137812337 194877397

LOAN FUNDSSecured Loans 3 698808208 699522858Unsecured Loans 4 63534211 762342419 56706792 756229650

Deferred Tax Liability — 16685068

957219816 967792115

APPLICATION OF FUNDSFIXED ASSETS 5

Gross Block 1966811769 1973505961Less : Depreciation 1484847852 481963917 1462059938 511446023

INVESTMENTS 6 1052792 881502

CURRENT ASSETS, LOANS & ADVANCESInventories 7 183181387 177411086Sundry Debtors 8 202702521 214737678Cash & Bank Balances 9 29090028 21581231Loans & Advances 10 59657779 51597800

474631715 465327795

LESS : CURRENT LIABILITIES & PROVISIONSCurrent Liabilities 11 254025619 235983090Provisions 12 19000 2015000

254044619 237998090

NET CURRENT ASSETS 220587096 227329705

PROFIT & LOSS ACCOUNT 253616011 228134885

957219816 967792115

NOTES ON ACCOUNTS 21

Schedules 1 to 21 form an integral part of the accounts

As per our report of even date annexedFor B.K. SHROFF & CO., RAMESH KUMAR JAIN VIDIT JAIN

Chartered Accountants Chairman & Managing Director Executive Director

Place : New Delhi O.P. SHROFF REKHA SHARMA S.K. CHHAJERDated : 4th September, 2010 Partner Company Secretary Whole-time Director


BALANCE SHEETAS AT 31ST MARCH, 2010


23

PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2010






INCOMEGross Sales 869825049 998545261Less : Excise Duty recovered 133355 104741

Net Sales 869691694 998440520Other Income 13 19969932 34675144Accretion / (Decretion) in Stocks 14 8834522 (35765871)

898496148 997349793

EXPENDITUREPurchases 3340 7064794Raw Materials consumed 15 393415591 479067492Job Work expenses 21788210 23825346Stores, Dyes & Packing Material 87372030 65653716Power & Fuel 105319385 117019240Excise duty 31294931 152011Employees 16 89006437 90599446Interest 17 39566814 67320497Selling & Distribution expenses 18 47217098 54228729Other expenses 19 94541397 109191869Depreciation 31035835 117353247

940561068 1131476387

PROFIT / (LOSS) FOR THE YEAR (42064920) (134126594)Extra ordinary Items 3979 751518801(See note 7 on Schedule 21)

PROFIT / (LOSS) BEFORE TAXATION (42060941) 617392207Provision / Payment for Taxation

Wealth Tax 19000 15000Fringe Benefit Tax — 2000000Taxation adjustment of previous years (net) 86253 211668Deferred Tax Liability / (assets) (16685068) 16685068

PROFIT / (LOSS) AFTER TAXATION (25481126) 598480471Balance brought forward from previous year (228134885) (864191109)Transfer from Debenture Redemption Reserve — 37500753Transfer from Export Incentive Reserve — 75000

Balance carried to Balance sheet (253616011) (228134885)

Basic & Diluted Earning per share 20before extra ordinary items (4.47) (26.82)after extra ordinary items (4.47) 104.88

NOTES ON ACCOUNTS 21

Schedules 1 to 21 form an integral part of the accounts

24


A Cash Flow from Operating ActivitiesNet Profit / (Loss) before Tax and extraordinary item (42064920) (134126594)Adjustments for :

Depreciation 31035835 117353247Interest Income (1141942) (1100755)Profit / Loss on Fixed Assets sold / discarded (110359) (20391446)Dividend Income — (150)Interest Charged 39566814 67320497Investment Written Off 28710 —Expenses relating to Unmaterized Project Written Off — 130202

Operating Profit before Working Capital Changes 27314138 29185001Adjustments for :

Trade & Other Receivables 4454212 84234583Inventories (5770300) 36625748Trade Payables & Other Liabilities 38305405 (38533707)

Cash Generated from Operations 64303455 111511625Interest Paid (49713195) (38062875)Taxes Paid (2580286) (2173701)

Net cash from Operating Activities 12009974 71275049

B Cash Flow from Investing ActivitiesPurchase of Fixed Assets (2108370) (203038)Sale of Fixed Assets 665000 29348966Interest Received 1141942 1100755Purchase of Investment (200000) —Dividend Received — 150

Net Cash used in Investing Activities (501428) 30246833

C Cash Flow from Financing ActivitiesProceeds from Borrowings (3999749) (99754678)

Net Cash used in Financing Activities (3999749) (99754678)

Net Decrease / Increase in Cash & Cash equivalents 7508797 1767204Cash & Cash equivalants at start of the year 21581231 19814027Cash & Cash equivalants at close of the year 29090028 21581231

Note : Brackets represent cash outflow

NOTES ON ACCOUNTS 21Schedules 1 to 21 form an integral part of the accounts





CASH FLOW STATEMENTFOR THE YEAR ENDED 31ST MARCH, 2010


25

SCHEDULES

Current Year Previous YearRs. Rs.

1. SHARE CAPITAL

Authorised12100000 Equity Shares of Rs. 10 each 121000000 121000000

Issued, Subscribed & Paid Up5556506 Equity Shares of Rs. 10 each

fully paid up 55565060 55565060

1500000 Equity Shares of Rs. 10 eachRe. 1 called and paid up 1500000 1500000

57065060 57065060

2. RESERVES & SURPLUS

Capital ReserveAs per last Balance Sheet 6113000 6113000

Share Premium AccountAs per last Balance Sheet 56610090 56610090

Export Incentive ReserveAs per last Balance Sheet — 75000Less : Transferred to Profit & Loss Account — — 75000 —

Debenture Redemption ReserveAs per last Balance Sheet 75089247 112590000Less : Transferred to Profit & Loss Account — 75089247 37500753 75089247

137812337 137812337

26


3. SECURED LOANS

From Financial InstitutionsTerm Loans (a) — 326614130(See note 5 on Schedule 21)

From BanksWorking capital Loans (b) 306948448 296738083Vehicle Loans (c) 386397 940790Interest accrued and due (b) 178197 307513042 — 297678873

From CompaniesTerm Loans (a) 314500000 —(See note 5 on Schedule 21)Vehicle Loans (c) 31769 314531769 140608 140608

Debentures5,00,000 19% Redeemable Non Convertible

of Rs. 100 each (a) 10637664 15841776Add : Interest accrued and due (a) 48405390 59043054 38520780 54362556

2,34,030 14% Redeemable Partly Convertibleof Rs. 125 each (a) 4842422 4885173

Add : Interest accrued and due (a) 432054 5274476 437387 5322560

23,53,856 15% Redeemable Partly Convertibleof Rs. 25 each (a) 11307777 14266041

Add : Interest accrued and due (a) 1138090 12445867 1138090 15404131

698808208 699522858

(a) Secured on pari-passu basis by way of joint equitable mortgage of immovable properties both presentand future and hypothecation of all movables subject to prior charge in favour of the company’sbankers for working capital requirements alongwith personal guarantee of the chairman & managingdirector (CMD).

14% and 15% Debentures are also secured by exclusive first charge on the properties at Gujarat.

(b) Secured against hypothecation of raw materials, finished goods, semi-finished goods, stores and spareparts, book debts, etc. together with second charge on all immovable / movable fixed assets of thecompany both present and future alongwith personal guarantee of CMD and two outsiders.

(c) Secured against hypothecation of vehicle financed out of the loan amount.


27

GROSS BLOCK DEPRECIATION NET BLOCK

As at Additions Sales/ Total Upto For the Adjust- Total As at As atParticulars 1.4.2009 Adjust- 31.3.2010 31.3.2009 Year ments 31.3.2010 31.3.2010 31.3.2009

mentsRs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Land - Freehold 4835213 — — 4835213 — — — — 4835213 4835213

Buildings 254996092 — — 254996092 133396177 4324765 — 137720942 117275150 121599915

Plant & 1681755754 1647694 8577382 1674826066 1305491978 24706257 8142785 1322055450 352770616 376263776Machinery

Furniture &Fixtures 6338844 100610 — 6439454 5505728 111083 — 5616811 822643 833116

Factory & OfficeEquipments 14393874 223277 — 14617151 11129937 1024831 — 12154768 2462383 3263937

Vehicles 11186184 136789 225180 11097793 6536118 868899 105136 7299881 3797912 4650066

Total 1973505961 2108370 8802562 1966811769 1462059938 31035835 8247921 1484847852 481963917 511446023

Previous Year 2023166496 203038 49863573 1973505961 1385482542 117353247* 40775851 1462059938 511446023

* Includes impairement loss of Rs. 80222998


4. UNSECURED LOANS

Loans & AdvancesFrom Companies— Free of Interest 59870000 48020000— Bearing Interest 1350000 4350000Interest accured and due 59023 61279023 — 52370000

From Life Insurance Corporation of India* 2255188 4336792

63534211 56706792

* Secured by an irrevocable guarantee of CMD.

5. FIXED ASSETS

28

Current Previous Current Year Previous YearYear Year Rs. Rs.

6. INVESTMENTS (at Cost)

Quoted

In Equity Shares of Rs. 10 each

Trade - Long Term InvestmentsAmit Spinning Industries Limited 100 100 2329 2329C. T. Cotton Yarn Limited * — 100 — 2543East India Syntex Limited * — 25 — 250Global Syntex (Bhilwara) Limited 9900 9900 108900 108900G.T.N. Industries Limited 100 100 17597 17597K.C. Textiles Limited * — 50 — 512Leena Textiles Limited * — 200 — 2000Malwa Cotton Spinning Mills Limited 50 50 16325 16325Mayur Syntex Limited * — 50 — 513Sanghi Polysters Limited 200 200 7141 7141Woolworth India Limited * — 150 — 22892

Non-Trade - Long Term InvestmentsPasupati Fincap Limited 70000 70000 700000 700000

Non-Trade - Current InvestmentsSrishti Video Corp. Limited 240000 240000 2008050 2008050

2860342 2889052Less : Provision for diminution in value of investments 2008050 2008050

852292 881002

UnquotedIn Equity Shares of Rs. 10 each

Non - Trade - Long Term InvestmentsIndia Comm Directories Limited 50 50 500 500Shivalik Solid Waste Management Ltd. 20000 — 200000 —

1052792 881502

Market value of Quoted Investments 1108350 123110

* Written off during the year

No. of Shares / Debentures


29


7. INVENTORIES(As taken, valued and certified by the management)

Stores & Spares 10184142 9470074

Raw Materials 6630039 10408328

Finished goods

Own Manufactured 123123902 139258782(including in transit Rs. 10597716, Previous Year Rs. 5054228)

Trading 1053660 1053660

Semi - finished goods 42018493 17058643

Waste 171151 161599

183181387 177411086

8. SUNDRY DEBTORS(Unsecured)

Exceeding six months— considered good 46197937 65542889— considered doubtful 8634844 4369263

54832781 69912152

Less : Provision for doubtful debt 8634844 4369263

46197937 65542889

Other debts - considered good 156504584 149194789

202702521 214737678

9. CASH & BANK BALANCES

Cash in hand 1124730 4121919

Cheques / drafts in hand 10280532 2184172

Balances with Scheduled BanksIn Current Account 4194108 2571722In Fixed Deposit / Margin Money Account 13324558 12537318

Balance in Post Office Savings Bank Account 166100 166100

29090028 21581231

30


10. LOANS & ADVANCES(Unsecured - Considered good unless stated otherwise)

Loans - considered doubtful — 15000000

Less : Provision for doubtful loans — — 15000000 —

Advances(recoverable in cash or in kind or for value to be received)

— considered good 44354343 39476257

— considered doubtful 39775070 52607165

84129413 92083422

Less : Provision for doubtful advances 39775070 44354343 52607165 39476257

Interest receivable

— considered good 2025837 1007141

— considered doubtful — 6028688

2025837 7035829

Less : Provision for doubtful receivable — 2025837 6028688 1007141

Balance with Central Excise 2918999 1248590

Advance Payment of Taxes 1392150 913117(including tax deducted at source)

Security Deposits 8966450 8952695

59657779 51597800


31


11. CURRENT LIABILITIES

Sundry Creditors 156982627 154091091Other Liabilities 95937102 60523232Interest accrued but not due 1105890 21368767

254025619 235983090

12. PROVISIONS

For Wealth Tax 19000 15000For Fringe Benefit Tax — 2000000

19000 2015000

13. OTHER INCOME

Rent 110075 66352Dividend on Trade Investments — 150Interest from Banks & Others 1141942 1100755Job Work Income 159301 191953Miscellaneous Receipts 1236957 945508Claims, Rebates & Discounts 2771919 823535Commission Received 3697551 —Difference in Exchange (Net) 36659 —Liabilities no longer required written back 9451685 1132425Income / Adjustments relating to earlier years 915923 124821Provision for Bad debts Written Back — 9898199Profit on Sale of Forward Contract 257561 —Advances earlier provided now Recovered 80000 —Profit on Sale of Fixed Assets (Net) 110359 20391446

19969932 34675144

14. ACCRETION / (DECRETION) IN STOCKS

Closing StocksFinished Goods

Own Manufactured 123123902 139258782Trading 1053660 1053660

Semi-finished Goods 42018493 17058643

Waste 171151 161599

166367206 157532684

Opening StocksFinished Goods

Own Manufactured 139258782 160084313Trading 1053660 1053660

Semi-finished Goods 17058643 29279779

Waste 161599 2880803

157532684 193298555

Accretion / (Decretion) in Stocks 8834522 (35765871)

32


15. RAW MATERIALS CONSUMED

Opening Stock 10408328 12525173Add : Purchases 389637302 476950647

400045630 489475820Less : Closing Stock 6630039 10408328

393415591 479067492

16. EMPLOYEES

Salaries, Wages, Bonus & Other benefits 78924042 81750212Gratuity 2121612 364508Contribution to Provident Fund, Employees’ State Insurance, etc. 6229463 7055441Workmen & Staff Welfare expenses 1278879 1198425Staff Recruitment & Training expenses 452441 230860

89006437 90599446

17. INTEREST

On Debentures 9884610 8055103On Term Loan 2637240 21368767To Banks & Others 27044964 37896627

39566814 67320497

18. SELLING & DISTRIBUTION EXPENSES

Commission & Brokerage 7415100 10612650Freight & Forwarding charges 22516351 26905229Claims, Rebates & Discounts 7236245 5579540Sales / Turnover Tax 888418 2856535

Others 9160984 8274775

47217098 54228729


33


19. OTHER EXPENSES

Rent 6687442 5653494Rates, Taxes & Fees 607425 1282308Insurance 944422 1496781Repairs & Maintenance

Plant & Machinery 671850 1638860Building 12250 28452Others 1032935 1717035 484102 2151414

Generator Hire Charges 7193226 7004008Travelling & Conveyance 15397266 15412372Bank & Finance Procurement expenses 10845014 9296333Miscellaneous expenses 15016683 15642027Directors’ Fees 4500 1000Bad Debts / Advances written off

Bad Debts / Advances written off 60762762 978145Less : Provided in earlier years 33780783 26981979 — 978145

Irrecoverable Claims written off 1051759 545261Provision for Doubtfull Debts / Advances 4265581 29557165Previous Year expenses 3178040 384600Charity & Donation 54680 49506Auditors’ Remuneration

As Audit Fees 280000 280000As Tax Audit Fees 70000 70000In Other Capacity 212000 562000 212000 562000

Loss on Cancellation of Forward Contracts (Net) — 12145224Difference in Exchange (Net) — 6893296Sundry Balance Adjustment (Net) 5635 6733Investment written off 28710 —Expenses relating to Unmaterized Project Written Off — 130202

94541397 109191869

20. BASIC & DILUTED EARNING PER SHARE

Net Profit / (Loss) after Tax but before extra ordinary items (A) (25485105) (153038330)

Net Profit / (Loss) after Tax and extra ordinary items (B) (25481126) 598480471

No. of fully paid Equity Shares 5556506 5556506No. of partly paid Equity Shares (1500000x1/10) 150000 150000

Total No. of Equity Shares (C) 5706506 5706506

Basic Earning per Share before extra ordinary items (A/C) (4.47) (26.82)

Basic Earning per Share after extra ordinary items (B/C) (4.47) 104.88

Note : Diluted earning per share is antidilutive.

34

21. NOTES ON ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES

A.. Basis of Preparation of Financial Statementsa) The financial statements have been prepared under the historical cost convention

in accordance with the generally accepted accounting principles and the provisionsof the Companies Act, 1956, Subject to what is stated herein below, as adoptedconsistently by the company.

b) The company generally follows mercantile system of accounting and recognizessignificant items of income and expenditure on accrual basis.

B. Fixed AssetsFixed assets are stated at cost of acquisition inclusive of inward freight, duties & taxesand incidental expenses relating to acquisition and are net of modvat credit. In respectof major projects, related pre-operational expenses form part of the value of assetscapitalized.

C. DepreciationDepreciation is calculated on fixed assets on ‘Straight Line Method’ in accordance withSchedule XIV of the Companies Act, 1956 as under :

a) In respect of Plant & Machinery by applying the revised rates in force in termsof the notification dated 16.12.1993. Based upon legal opinion depreciation hasbeen provided at the rate prescribed for continuous process plant.

b) In respect of other assets at the rates in force prior to the above mentionednotification and at the revised rates on assets acquired thereafter.

D. Foreign Currency Transactions, Derivatives Instruments and hedge Accountinga) Transactions denominated in foreign currencies are normally recorded at the

exchange rate prevailing at the time of the transaction.

b) Items denominated in foreign currencies at the year end and not covered by forwardexchange contracts are translated at year end rates and those covered by forwardexchange contracts are translated at the rate ruling at the date of transaction asincreased or decreased by the proportionate difference between the forward rateand exchange rate on the date of transaction, such difference having beenrecognized over the life of the contract.

c) Any income or expense on account of exchange difference either on settlementor on translation is recognized in the profit or loss account.

d) The company uses foreign currency forward contracts and currency options tohedge its risks associated with foreign currency fluctuations relating to certain firmcommitments and forecasted transactions. Derivative instruments are initiallymeasured at fair value and are re-measured at subsequent reporting dates. Markto market losses on such measurement are recognized in the profit & loss account.


35

E. Investmentsa) Long term investments are stated at cost. Provision for diminution in the value

of long term investments is made only if such a decline is other than temporaryin the opinion of the management.

b) Current investments are valued at cost or market value whichever is lower. Thedecline in the value of current investments is provided in the accounts each year.

F. InventoriesInventories are valued at lower of cost or market price except for waste. Waste is valuedat realizable value. The cost comprises of cost of purchase, cost of conversion andother cost including appropriate production overheads incurred in bringing suchinventories to their present location. In case of raw materials and stores & sparesthe cost is determined using FIFO method.

G. SalesSales are inclusive of recovery of excise duty and packing charges and net of returnsand sales tax.

H. Taxes, Duties etc.Excise duty has been accounted on the basis of both payments made in respect ofgoods cleared as also provision made for goods lying in bonded warehouses.Provision is made for goods meant for sale in domestic tariff area only.

I. Employee Retirement BenefitsCompany’s contribution to state plans are charged to revenue every year. Liability todefined benefit plans is determined on the basis of an actuarial valuation at the endof the year. The actuarial valuation is recognized as an expenses. Actuarial gains andlosses comprises experience adjustments and the effect of changes in actuarialassumptions and are recognized immediately in the profit and loss account as incomeor expense.

J. Borrowing CostInterest and other costs in connection with the borrowing of the funds to the extentrelated / attributed to the acquisition / consumption of qualifying fixed assets arecapitalized upto the date when such assets are ready for its intended use and otherborrowing cost are charged to profit & loss account.

K. Earning per ShareBasic earning per share is calculated by dividing the net profit for the year attributableto equity shareholders by the weighted average number of equity shares outstandingduring the year.

Diluted earning per share is calculated by dividing the net profit attributable to equityshareholders by the weighted average number of equity shares outstanding duringthe year (adjusted for the effects of dilutive options).

L. Deferred TaxationDeferred taxation is provided using the liability method in respect of the taxation effectarising from all material timing differences between the accounting and tax treatment

36

of income and expenditure which are expected with reasonable probability to crystallizein the foreseeable future.

Deferred tax benefits are recognized in the financial statements only to the extent ofany deferred tax liability or when such benefits are reasonably expected to be realizablein the near future.

M. Impairment of AssetsImpairment loss is provided to the extent the carrying amount of assets exceeds theirrecoverable amount. Recoverable amount is the higher of an asset’s net selling priceand its value in use. Value in use is the present value of estimated future cash flowsexpected to arise from the continuing use of an asset and from its disposal at theend of its useful life.

N. Contingent LiabilitiesContingent liabilities not provided for in the accounts are separately shown in the AnnualStatement of Accounts.

O. Events occurring after Balance Sheet dateEvents occurring after the Balance Sheet date have been considered in the preparationof financial statements.


2. Contingent liabilities not provided for in respect of

a) Bank Guarantees 4017148 4361707

b) Claims not acknowledged as debts 17145958 15439436

c) Excise Duty demands disputed by the company — 30548014

d) Sales Tax demands disputed by the company 4407602 4407602

3. The company had on 16.7.1994 alloted to promoters and their associates 15,00,000 equityshares of Rs. 10 each for cash at a premium of Rs. 22 each on which Rs. 3.50 wascalled and paid up (Rs. 1 towards Equity shares and Rs. 2.50 towards premium). Balanceamount of Rs. 28.50 per share is yet to be called.

4. In view of the accumulated losses incurred by the company exceeding its net worth, thecompany has made a reference under Section 15(1) of Sick Industrial Companies (Specialprovisions) Act, 1985 to the Board of Financial and Industrial under Reconstruction (BIFR).The company was declared a sick Industrial company within the meaning of section 3(1)(o)of the said Act by BIFR on 14.7.2005 and Bank of Baroda was appointed as the operatingagency (OA) to examine viability of the company and formulate rehabilitation scheme. TheOA has filed a draft rehabitition scheme with BIFR which is under consideration.Consequently, the account of the company for the year ended 31.03.2010 have beenprepared on basis that the company is a going concern.

5. a) In respect of loan of Rs. 567482264 the lender Industrial Development Bank of India(IDBI) has an option to convert whole of the outstanding amount of the loan or a part


37

not exceeding 20% of the loan whichever is lower into fully paid up equity shares atpar if the conditions specified in the loan agreement are contravened.

b) In respect of loan of Rs. 115000000 the lender IDBI has an option to convert a partof the loan not exceeding Rs. 23000000 at par into equity shares of the company ofRs. 10 each during the currency of the loan.

c) Besides the above, IDBI has granted Equipment Finance loan of Rs. 25735648 andhas investment of Rs. 1390000 in 14% debentures of face value of Rs. 125 each andRs. 20000000 in 15% debentures of face value of Rs. 25 each.

d) IDBI had assigned / transferred to Stressed Assets Stabilisation Fund (SASF) thefinancial assistance granted by it to the company. SASF vide their letter dated18.04.2006 has agreed to a negotiated settlement of the assistance extended to thecompany which has been modified vide their letter dated 26.06.2008 and 30.06.2009and the modified main terms and conditions are as under :

i) Payment of balance outstanding of Rs. 3145 lacs in monthly balloning installmentscommencing from 01.10.2009 till 01.03.2012.

ii) The above installments to carry interest @ 10% p.a. from 26.07.2008 payable in12 monthly installments commencing from 01.04.2012.

iii) SASF will be allotted equity shares equivalent to 10% of the fully paid up equitycapital of the company, post derating and post fresh issue of equity capital, subjectto a minimum allotment of 6 lacs equity shares of face value of Rs. 10 each,with the promoters having first right of refusal.

iv) The company / promoters shall arrange to pay the settlement amount from sourcesas agreed upon.

v) In the event of part / whole of the settlement amount being financed from sale ofassets, SASF would have the right to recompense to the extent of appreciationof the assets.

vi) In the event of delay in payment of settlement amount as per proposed scheduledefaulted amount would carry interest at 14% p.a. from due date to clearance ofsuch default and if the default in payment persists for 30 days. SASF shall havethe right to reverse the waiver of dues and restore the original liability as per theterms of the loan agreements entered into by the company and adjust the paymentreceived, if any towards the dues.

vii) During the pendency of loans, if any of the lenders is offered superior terms ofsettlement, SASF would retain the right to seek similar terms of settlement.

viii) The charge on company’s assets shall be released only on realization of entiresettlement amount.

ix) In the event, shares are not received in demat form within 3 months of approvalof the scheme by SASF, interest at PLR would be charged on the amount proposedto be converted into equity from the date of approval.

x) All securities, guarantees and other documents shall continue to be valid till theentire settlement amount is paid and all conditions of earlier loan agreementsshall apply mutatis mutandis.

38

SASF vide its letter dated 10.02.2010 has partial modified its letter dated 30.06.2009and further agreed to one time settlement of the outstanding negotiated settlementdues of the company subject to :

i) Payment of Rs. 2500 lac by J.M. Financial Assets Reconstruction Company Pvt.Ltd. (JMFARC) as consideration for assignment of the outstanding negotiatedsettlement dues of Rs. 3145 lacs in favour of JMFARC.

ii) Payment of additional Rs. 300 lacs (Rs. 200 lacs already paid) including Rs. 100lacs to be paid in lieu of allotment of 6 lacs equity shares of the company to SASF(since paid).

iii) All other conditions as mentioned in letter dated 30.06.2009 shall remainunchanged.

JMFARC has since paid Rs. 2500 lacs to SASF and the outstanding dues of SASFof Rs. 3145 lacs has been assigned in favour of JMFARC on 19th March, 2010. Thecompany has approached JMFARC for restructuring of outstanding dues of Rs. 3145lacs on certain proposed terms and conditions which are subject to approval of BIFR.The proposed terms and conditions of JMFARC has already been incorporated in thedraft rehabilitation scheme submitted to BIFR (Refer note no. 4 on Schedule 21). Asthe said terms and conditions are to be finalized by BIFR and can be operative onlyon clearance by BIFR, the accounts have been prepared on the terms and conditionsagreed to with SASF although the loan stands assigned to JMFARC.

6. a) Part B of Rs. 125 each out of the 14% secured redeemable partly convertibledebentures of Rs. 250 each were to be redeemed at par in three equal instalmentson expiry of 7th, 8th and 9th year from the date of allotment of the debentures i.e.21.12.1991.

b) Part B of Rs. 25 each out of the 15% secured redeemable partly convertible debenturesof Rs. 50 each were to be redeemed at par in three instalments of Rs. 8, Rs. 8 andRs. 9 on expiry of 7th, 8th and 9th year respectively from the date of allotment of thedebentures i.e. 09.12.1993.

c) 19% secured redeemable non-convertible debentures of Rs. 100 each were to beredeemed at par in three equal instalments on expiry of 6th, 7th and 8th year fromthe date of allotment of debentures i.e. 03.01.1994.

d) Majority of the debenture holders holding debentures detailed in (a)(b) & (c) aboveand Life Insurance Corporation of India (LIC) in respect of its unsecured loan ofRs. 10000000 has agreed to one time settlement (OTS) proposal of the company tosettle their dues and payment of the settled amount in monthly instalments subjectto following main terms and conditions :

i) In the event of any delay in payment of OTS instalments on due dates, the companyshall pay interest at the agreed rate for the period of delay.

ii) If the company offers better proposal to any other creditor, the same shall be offeredto these settlers also.


39

e) The debenture holders which have not agreed to OTS as detailed in (d) above are :

i) New India Assurance Co. Ltd. holding 19% debentures of face value of Rs. 100each aggregating to Rs. 5000000 (outstanding amount Rs. 5000000)

ii) ICICI holding 14% debentures of face value of Rs. 125 each aggregating toRs. 65000 (outstanding amount Rs. 20068) and 15% debentures of face valueof Rs. 25 each aggregating to Rs. 70000 (outstanding amount Rs. 70000).

iii) Individual public debenture holders holding 14% debentures of face value ofRs. 125 each aggregating to Rs. 5269875 (outstanding amount Rs. 4815093) and15% debentures of face value of Rs. 25 each aggregating to Rs. 9072450(outstanding amount Rs. 8976596).

f) During the year individual public debenture holders holding 14% debentures of facevalue of Rs. 125 each aggregating to Rs. 28125 (outstanding amount Rs. 24339) and15% debentures of face value of Rs. 25 each aggregating to Rs. 1750 (outstandingamount Rs. 1750) have consented to settlement on similar terms and conditions asdetailed in (d) above. Consequently, principal and interest amounting to Rs. 3979 hasbeen written back in these accounts as extraordinary items.

g) The company has not provided and paid interest amounting to Rs. 20339120 (includingRs. 18338237 for earlier years) on 14% and 15% Redeemable partly convertibledebentures due to paucity of funds and consequently TDS thereon has also not beenaccounted for in the books of account.

7. Extra ordinary items includes :


(i) Liability of Term loan from IDBI / SASFwritten back — 20000000

(ii) Principal amount of debentureswritten back on settlement 3979 1259375

(iii) Interest provided on debentures writtenback on settlement — 30465677

(iv) Difference between outstanding dues and thesettlement amount in respect of securedloan availed from IFCI — 699793749

3979 751518801

8. In pursuance of Accounting Standard on Impairment of Assets (AS28) issued by The Instituteof Chartered Accountants of India the company had identified and impaired certain assets /cash generating units. There is no further impairment / reversal during the year.

9. In view of losses, Debenture Redemption Reserve of Rs. 1674150 has not been created.

40

10. As recommended under the Accounting Standard (AS)22, ‘Accounting for Taxes On Income’,issued by the Institute of Chartered Accountants of India the company has during the yearprovided for deferred tax asset to the extent of deferred tax liability as on 31st March, 2009only in view of uncertainity of realization of the balance amount. The details of deferredtax assets / (liabilities) are as under :

As at Tax effect As at31st March, 2009 for the year 31st March, 2010

Rs. Rs. Rs.

Deferred Tax (liability)

Fixed Assets (71243275) (2899479) (74142754)

(71243275) (2899479) (74142754)

Deferred Tax Assets

Carry forward losses 46397856 50624749 97022605

Section 43B items 914568 20678039 21592607

Provision for Gratuity 2336059 309541 2645600

Others 4909724 (1073206) 3836518

54558207 70539123 125097330

Net deferred tax asset / (liability) (16685068) 67639644 50954576

Note :Tax effect for the year is abnormally high as the remission of loan liability of Rs. 160393465was considered as income for the year while providing deferred tax liability for the yearended 31st March, 2009 but, on legal advice, the said remission has been treated ascapital receipt in the return filed for assessment year 2009-10.

11. Employee benefit obligations :

The various benefits provided to employees have been classified as under :

(a) State PlansContribution made by the company to various state plans which have been recognizedas an expense in the profit & loss account are :


Employer’s contribution to EmployeesState Insurance Scheme 1652502 2425701

Employer’s contribution to EmployeesProvident Fund 4149730 4629740


41

(b) Defined Benefit PlanThe present value of obligation on account of gratuity (unfunded) is determined basedon actuarial valuation :


I. AssumptionsDiscount Rate 7.90% 7.10%

Rate of increase in Compensation 8.00% 8.00%

II. Table showing Changes in Present Value ofobligations during the period Present Value ofobligation as at the beginning of the period 6872784 10347761

Interest cost 487968 864038

Current Service Cost 1621157 1327762

Benefit paid (1029919) (3839485)

Actuarial (gain) / loss on obligations (20070) (1827292)

Present Value of obligation as at theend of the period 7964477 6872784

III. Table showing Fair Value of Plan AssetsFunded Status (7964477) (6872784)

IV. Actuarial gain / loss recognized for the periodActuarial gain / (loss) for the period - obligation 20070 1827292

Total (gain) / loss for the period (20070) (1827292)

Actuarial (gain) / loss recognized in the period (20070) (1827292)

V. The amounts to be recognized in Balance Sheetand statements of profit and lossPresent Value of obligation as at the endof the period 7964477 6872784

Funded Status (7964477) (6872784)

Net Liability Recognized in Balance sheet 7964477 6872784

VI. Expense recognized in the statement ofprofit and loss for the period

Current Service Cost 1621157 1327762

Interest cost 487968 864038

Net actuarial (gain) / loss recognized inthe period (20070) (1827292)

Expenses Recognized in thestatement of Profit & Loss 2121612 364508

Notes :i) The above information is certified by the actuaryii) As per rules of the company leaves are not encashed.

42

12. As required under the Accounting Standard (As) 18, ‘Related partly disclouses’ issued bythe Institute of Chartered Accountants of India, the information regarding transactions thattook place between the company and its related parties are as under :

Related Party Relationship Description of Payment Outstandingtransaction as on

31.3.2010Rs. Rs.

Shri Ramesh Kumar Jain Chairman & Remuneration and 67557 —Managing Perquisites (65575) (—)Director (CMD)

Shri S.K. Chhajer Whole time Remuneration and 304398 —Director Perquisites (300768) (1000) (Cr.)

Shri H.P. Mathur Whole time Remuneration and — —Director Perquisites (242788) (—)

Shri Deepak Gupta Director Sitting fees 1500 500 (Cr.)(upto 23/09/2009) (1000) (—)

Shri Praveen Paliwal Director Sitting fees 3000 3000 (Cr.)(from 18/05/2009) (—) (—)

Shri Vidit Jain Son of CMD Remuneration and 547557 —Perquisites (545575) (2000) (Cr.)

Advance given — —(7800000) (—)

Smt. Sangeeta Chhajer Wife of Rent paid 226200 —whole time (226200) (—)Director

Shivani Textiles Ltd. Associate Sale — —(upto 1/10/2008) (96878284) (24637169) (Dr.)

Note : Previous year figures have been given in the brackets.

13. In the opinion of the management the diminution in the value of long term investmentsis temporary in nature and hence provision for the same is not required.

14. The company is in the process of identifying suppliers covered under the Micro, Small andMedium Enterprises Development Act, 2006. Hence, information thereto has not beenprovided.

15. The company has not made any provision for Income Tax for the year as there is no taxableincome / book profit under the provisions of the Income Tax Act, 1961.

16. Balance of sundry creditors, sundry debtors, investments and loans and advances aresubject to confirmation and reconciliation.

17. In the opinion of the Board the current assets, sundry debtors and loans and advanceshave a value on realization in the ordinary course of business, at least equal to the amountat which they are stated in the Balance Sheet.


43

18. The company’s business activity falls within a single primary reportable segment viz. Textilesand Textile Articles. Accordingly, pursuant to Accounting standard (As-17) “Segment Reporting”issued by the Institute of Chartered Accountants of India segmental information is notrequired to be given.

19. Previous year figures have been regrouped and / or re-arranged wherever considerednecessary.

20. Paise have been rounded off to the nearest rupee.


21. Advances include

Due from officers — —

Maximum amount due at any time during the year — 210539

22. Amount due to directors of the company 3500 1000

23. Managerial Remuneration

Salary 219990 381900

Contribution to Provident and Other Funds 26028 34608

Other Benefits 125937 192623

Note :(i) Shri Ramesh Kumar Jain, Chairman & Managing Director, has forgone his salary w.e.f. 16.04.03.

Other benefits are being availed.

(ii) The Company has been advised that the computation of net profits for the purpose of Directors’remuneration under Section 349 of the Companies Act, 1956 need not be enumerated since nocommission is being paid to the directors.

(iii) Remuneration of Rs. 3090 paid to Shri S.K. Chhajer, whole time Director, for the period from29.03.2010 to 31.03.2010 is subject to approval of the Central Government.

24. Sales include Export Incentives.

25. No unclaimed amounts were outstanding to be credited to investor education & protectionfund as on 31.03.2010.

44

26. Disclosure as required under clause 32 of listing agreement is as under :

Amount Maximumoutstanding amount

as on outstanding31.03.2010 during

the yearRs. Rs.

Loan and advances in the nature of loans wherethere is no repayment schedule or repaymentbeyond seven years or no interest or interestbelow Section 372A of the Companies Act :

H. Lon Hosiery Ltd. — 13928688(13928688) (13928688)

Mahadev Leasing Co. Ltd. — 7100000(7100000) (7100000)

Note :(i) Previous year figures are given in brackets

(ii) Provided in earlier years and written off during the year.

27. Information pursuant to the provisions of paragraphs 3, 4C and 4D of Part II of ScheduleVI of the Companies Act, 1956.

A. Capacities, Production, Turnover and Stocks

a) Licenced Capacity Unit QuantityCotton Yarn, Synthetic and BlendedMan-made Fibre Yarn Spindles 27000 (27000)

Cotton Terry Towels * Power Looms 8 (8)

Cotton Yarn / Polyester / Viscose / Acrylic /Polyester - Viscose / Blended Yarn ** Spindles 28500 (28500)

Knitted Fabrics Circuler Knitted 12 (12)Machines

100% Synthetic & Synthetic Blended Yarn Spindles 26784 (26784)

b) Installed Capacity *** Unit QuantityCotton Yarn, Synthetic and BlendedMan-made Fibre Yarn Spindles 15888 (15888)

Cotton Terry Towels * Power Looms 8 (8)

Cotton Yarn / Polyester / Viscose / Acrylic /Polyester - Viscose / Blended Yarn Spindles 25200 (25200)

Knitted Fabrics Circuler Knitted 7 (6)Machines

100% Synthetic & Synthetic Blended Yarn Spindles 26784 (26784)

* As per memorandum filed with the Secretariat for Industrial Approvals, New Delhi.No Industrial licence is required for exempted industries.

** Under 100% Export Oriented Scheme.

*** As certified by the management and not verified by the auditors, being a technical matter.


45

c) Production, Purchases, Turnover and Stocks

Class of Goods Unit Opening Stock Production Purchases Turnover Closing Stock

Quantity Value Quantity Quantity Value Quantity Value Quantity ValueRs. Rs. Rs. Rs.

Synthetic &Blended Yarn Kgs. — — 28480 — — 28480 2827360 — —

(8209) (779160) (23971) (—) (—) (32180) (2899088) (—) (—)

Cotton Yarn Kgs. — — — — — — — — —(138442) (14418593) (1216625) (67442) (7064794) (1422489) (152393678) (—) (—)

Cotton Fabrics Kgs. 1734 280868 536588 — — 537746 103950456 576 95000(—) (—) (614252) (—) (—) (612518) (99023778) (1734) (280868)

Sewing Thread Kgs. 687026 138977914 3820394 10 3340 3869500 715519746 637930 123028902(713938) (144886560) (3865695) (—) (—) (3892607) (684604202) (687026) (138977914)

Garments Pcs. 12396 1053660 131564 — — 131564 17043989 12396 1053660(12396) (1053660) (29364) (—) (—) (29364) (8390069) (12396) (1053660)

Others 161599 — 1856919 171151(2880803) (—) (22008616) (161599)

140474041 3340 841198470 124348713

(164018776) (7064794) (969319431) (140474041)

(a) Does not include Semi-finished goods and job work for outside parties.(b) Includes job work by outside parties.(c) Does not include export incentives Rs. 28626579 (Previous Year Rs. 29225830).

(a)

(c)

(b)

(b)

B. Raw Materials Consumed :

Class of Goods Unit Quantity Value (Rs.)

Polyester Fibre / Yarn Kgs. 3994312 299500133(3925918) (298963804)

Cotton / Cotton Yarn Kgs. 583430 93915458(2139960) (180103688)

393415591(479067492)

C. Consumption of imported and indigenous material and percentage thereof :

Class of Goods Imported Indigenous Total

% Value (Rs.) % Value (Rs.) Value (Rs.)

Raw Materials 3.60 14164632 96.40 379250959 393415591(0.69) (3292537) (99.31) (475774955) (479067492)

Stores, Dyes & 1.76 1538524 98.24 85833506 87372030Packing Materials (1.22) (800124) (98.78) (64853592) (65653716)

46


D. Other Particularsa) C.I.F. Value of imports

Capital Goods 1201750 (—)

Raw Material 13258119 (6214332)

Stores & Spares 1930970 (830292)

b) Expenditure in foreign currency

Travelling (Does not include cost of air tickets) 84115 (365562)

Commission & Brokerage 4465906 (6237464)

Claims — (527356)

c) Earnings in foreign exchange

F.O.B. value of export * 252207987 (279800369)

* Does not include exports through merchant exporters.

d) Income from services rendered

Job Work 159301 (191953)

Commission 3697551 (—)

E. Previous year figures have been given in the brackets.


47

30. BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

I. Registration Details

Registration No. State Code

Balance Sheet Date

II. Capital Raised during the year (Amount in Rs. Thousands) Public Issue Rights Issue

Bonus Issue Private Placement

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Total Liabilities Total Assets

Sources of Funds Paid-up Capital Reserves & Surplus

Secured Loans Unsecured Loans

Application of Funds Net Fixed Assets Investments

Net Current Assets Accumulated Losses

IV. Performance of Company (Amount in Rs. Thousands) Turnover (Gross Revenue) Total Expenditure

+ – Profit/Loss Before Tax + – Profit/Loss After Tax

Basic / Diluted Earning per Share in Rs. Dividend Rate %

* Including Extraordinary item Rs. 4000

V. Generic Names of Three Principal Products / Services of the Company

Item Code No. (ITC Code)

Product Description


Product Description


Product Description

Signature to Schedules 1 to 21

9 7 8 9 0 5

YearDate Month

9 5 7 2 2 0

1 0 5 3

8 8 9 6 6 6

�

- -

5 5 0 9 5 1 . 0 0

S Y N T H E T I C Y A R N

5 2 0 5 1 2 . 0 1

2 2 0 5 8 7

4 8 1 9 6 4

5 5 0 8 1 0 . 0 0

6 9 8 8 0 8

5 7 0 6 5

9 5 7 2 2 0

1 3 7 8 1 2

6 3 5 3 5

9 3 1 7 2 7

2 5 4 8 1





(-) 4 . 4 7

�

3 1 0 3 2 0 1 0

C O T T O N Y A R N

S E W I N G T H R E A D

4 2 0 6 1

-- --

-- --

2 5 3 6 1 6

*

48

CORPORATE INFORMATION

Board of DirectorsShri Ramesh Kumar Jain — Chairman & Managing DirectorShri S.K. Chhajer — Whole-time DirectorShri Vidit Jain — Executive DirectorShri Praveen Paliwal — Director

Company SecretaryMs. Rekha Sharma

President (Finance)Shri A.K. Monga

AuditorsM/s. B.K. Shroff & Co.,3/7-B, Asaf Ali Road,New Delhi - 110002.

BankersBank of Baroda Punjab National BankThe Nainital Bank Ltd. State Bank of TravancoreState Bank of Patiala ING Vysya Bank Ltd.Canara Bank

Registered Office & Works Sewing Thread UnitVillage Kapriwas (Dharuhera), Village Kheri (Kala-Amb),Distt. Rewari, Distt. Sirmour,Haryana. Himachal Pradesh.

Head Office1501, Nirmal Tower,26, Barakhamba Road,New Delhi - 110001.E'mail : [email protected]

Registrars & Shares / DebenturesTransfer AgentsM/s. Skyline Financial Services Pvt. Ltd.D - 153A, Ist Floor, Okhla Industrial Area,Phase - I, New Delhi - 110020Phones : +91-11-26812682, 26812683Fax : +91-11-30857562E'mail : [email protected]

Contents Page

Notice..........................................................................1Directors' Report.....................................................3Auditors' Report.....................................................16Balance Sheet.......................................................22Profit & Loss Account.........................................23Schedules...............................................................25Notes on Account.................................................34


49

RevenueStamp

PROXYPASUPATI SPINNING & WEAVING MILLS LTD.

Regd. Office & Works : Village Kapriwas, (Dharuhera) Distt. Rewari, (Haryana).Head Office : 1501, Nirmal Tower, 26, Barakhamba Road, New Delhi-110001.

I/We___________________________________________________________________________

of______________________________________________________________________________

being a member / members of PASUPATI SPINNING & WEAVING MILLS LTD.

hereby appoint Mr. / Ms.___________________________________________________________

of_______________________________________________________________or failing him / her

_____________________________________of_________________________________________

______________________________________or failing him / her____________________________

_____________________________________of_________________________________________

as my / our proxy in my / our absence to attend and vote for me / us on my / our behalf,at the 30th Annual General Meeting of the Company, to be held on Thursday the30th September, 2010 at 12.00 Noon and at any adjournment thereof.

As WITNESS I / We lay my / our hand / hands on this_________________day of___________2010

Signed by the said

Note : The proxy must be deposited at the Registered Office / Head Office of the Companynot less than 48 hours before the time for holding the Meeting.

Documents

PASUPATI SPINNING & WEAVING MILLS LIMITED