Regd. Off : A-60, OKHLA INDUSTRIAL AREA, PHASE - II, NEW DELHI - 110020.

UNAUDITED STANDALONE FINANCIAL RESULTS

FOR THE QUARTER ENDED SEPTEMBER 30, 2009

'The above unaudited standalone financial results for the quarter ended September 30, 2009 have been reviewed by the Audit Committee and were approved by the Board of Directors in their meeting held on October 30, 2009.

The Statutory Auditors have carried out a 'Limited Review' of the unaudited standalone financial results of the Company for the quarter and half year ended September 30, 2009.

Butibori unit was initially granted Sales Tax Exemption for 14 years under the Package Scheme of Incentives, 1993, upto 31st December, 2008, vide Exemption certificate EC No. 2887. Consequent to High Court Order of demerger, Unit applied for issue of separate certificate in its favour, valid upto December 31, 2008 after splitting/ canceling the above certificate. However Development Commissioner (Industries), Govt. of Maharashtra, reduced the initial validity period from 14 yrs to 11 yrs i.e. upto 31 December, 2005. The unit has applied for the restoration of the original validity period upto December 31, 2008 in terms of the High Court order.
In view of expiry of the exemption benefits, the Butibori unit has given an undertaking to the Sales Tax Department for payment of taxes with interest with effect from January 1, 2006 in case it fails to get the extension of exemption period and was accordingly selling finished goods, waste and scrap etc. without charging sales tax (VAT and Central Sales Tax) under exemption. With effect from 1st Jan’2009 the unit is selling its products after charging sales tax / VAT as applicable.

Pending approval of such restoration, the unit has accrued VAT receivable amounting to Rs. 848.76 lacs for the period January 1, 2006 to December 31, 2008. In case the unit fails to get such sales tax exemption from authorities, an amount, including interest, of Rs. 1,283.22 Lacs (Rs. 1,249.57 Lacs in respect of earlier periods) will be payable including Rs. 33.65 Lacs for the current quarter and Rs. 67.29 lacs for the half year ended September 30, 2009.
The unit has also filed a petition before the Hon’ble High Court, Nagpur to grant relief on the said matter and is hopeful of recovery of such amount. This matter has been qualified in the statutory auditor's limited review report for the quarter and half year ended September 30, 2009. The management is hopeful of obtaining the exemption.

The Company has an investment of Rs. 2,044.70 lacs in Amit Spinning Industries Limited (ASIL), a subsidiary, as on September 30, 2009, The accumulated losses in ASIL, at the quarter end has fully eroded its net worth. In the opinion of the management, the above diminution in this long term investment is due to adverse business conditions and is not ultimately expected to continue in future. Based on recent performance and trends of ASIL and overall industry outlook, there is an increase in average selling prices of yarn, consistent increase in production level and reduction in procurement costs of raw materials. The management believes that ASIL would start earning cash profits within a reasonable period of time.

The recoupment of losses by ASIL is dependent on the outcome of management’s future plans to revive the operations and generate adequate cash profits. Any further deterioration in the industry trends could adversely impact the operations of ASIL. However, management is optimistic with respect to the future financial viability of this subsidiary and accordingly, provision for the diminution in the value of this long term investment is not considered necessary at this stage.
Regarding the loans, advances, debtors and interest due on the loan amounting to Rs. 4,802.94 lacs, Rs. 432.13 lacs, Rs. 112.40 lacs and Rs. 125.17 lacs respectively, management believes that the amounts would be realized within a reasonable period of time once the operation starts generating adequate cash profits as stated above and is also negotiating with various vendors of ASIL to recover the advances paid by it and hence further improve the liquidity position. Accordingly, no provision is considered necessary at this stage. These matters have been qualified in the statutory auditor's limited review report for the quarter and half year ended September 30, 2009.

Schoeller Litvinov k.s. (SLKS), the Czech step-down subsidiary of the Company, is adversely affected by global recession resulting in reduction in demand, increase in input costs and shortage of working capital. As a result of these, accumulated losses of the step-down subsidiary have exceeded its net worth as at September 30, 2009. Based on order of a Court in that country, this step-down subsidiary is in the process of submitting a reorganisation plan to restructure its assets and liabilities. The revival of this step-down subsidiary is dependent on the Court approving the reorganization plan and management being able to implement the plan successfully.

Management believes that the reorganization plan coupled with improvement in the global textile market, will turn around the step-down subsidiary so as to make good its losses in a reasonable period of time and will also place the step-down subsidiary in a position to repay the debtors balance of Rs. 5,105.34 lacs and advances of Rs. 205.74 lacs due to the Company as at September 30, 2009. SLKS has sufficient stock and receivables which are expected to be realized during the year ending March 31,2010 and the Company expects to reduce its outstanding advances significantly. Accordingly, provision against these balances is not considered necessary at this stage. These matters have been qualified in the statutory auditor's limited review report for the quarter and half year ended September 30, 2009.

As on September 30, 2009, accumulated losses of the Company continue to exceed 50% of its net worth. In the opinion of the management the Company’s operations are affected by global business downturn. The overall industry outlook and economy has improved which has positively impacted the performance of the company, based on which, the management believes that losses incurred in past would be made good and the Company would start earning significant cash profit in foreseeable future. Accordingly, these financial results have been prepared on a going concern basis on the strength of management’s plan of revival including reorganisation of business and restructuring of loan facilities by the lenders.