'The above Unaudited Standalone Financial Results have been reviewed by the Audit Committee and were approved by the Board of Directors in their meeting held on November 07, 2012.

The Statutory Auditors have carried out a 'Limited Review' of the Unaudited Standalone Financial Results of the Company for the quarter and six month ended September 30, 2012.

As on September 30, 2012, the accumulated losses of the Company have exceeded its net worth. Accordingly company in compliance with the provisions of section 23(1) of Sick Industrial Companies (Special Provisions) Act, 1985 will file a reference with Board for Industrial and Financial Restructuring (BIFR). However, in the opinion of the management, the Company’s operations have been adversely affected a) due to ban on yarn export by the government resulting in the piling up of Yarn inventory and its offloading at reduced prices during current year and b) very high volatility in Raw Material prices, Further, considering the change in scenario, recent performance and trends of the company as well as overall industry outlook, there is an increase in average selling prices of the yarn, stability in production levels and reduction in procurement costs of raw materials. Resultantly, the company has started earning net profits and the management believes that losses incurred in the past would reasonably be made good, in due course. The financial statements, as such have been prepared on a going concern basis on the strength of management’s plan of revival including reorganization of business and restructuring of loan facilities under Corporate Debt Restructuring scheme.

The Company has an investment of Rs 5,610.11 lacs and Rs. 93.24 lacs in its subsidiary Spentex Netherlands B. V. (SNBV) and its step down subsidiary Spentex Tashkent Toytepa LLC (STTL) respectively. Further it has Rs. 700.12 lacs as export receivable from STTL and advances of Rs. 950.71 lacs in SNBV as on September 30, 2012. During the period of investment Government of Uzbekistan changed certain laws and policies by breaching the investment agreement and rendered operation of STTL unviable. Consequently STTL could not pay its debts and insolvency proceedings have been initiated against it. Since treaties entered between the Governments of India and Uzbekistan and the Investment agreement entered between Govt. of Uzbekistan and Spentex were breached, company has issued notice claiming protection of investment and payment of dues & compensation for the losses suffered by company. In view of legal opinion placed before the board, claims lodged with Govt of Uzbekistan and the value of assets certified by independent valuer, the Directors have decided not to make any provision for diminution in value of investment at this stage.