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KakatiyaTextilesLimited

26thAnnualReport2007-2008KAKATIYATEXTILESLIMITED

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ManagingDirector SriSumanthRamamurthiBoardofDirectors SriCSKPrabhu

SriSSRKoteswaraRaoDrIVenkatRao

CompanySecretary Mr RSrinivasanAuditors M/sKRavi&CoBankers AXISBankLtd.

AndhraBankShareTransferAgents IntimeSpectrumRegistryLtd.RegisteredOffice ELGITOWERS

737D,GreenFieldsPuliakulamRoad,Coimbatore-641045Phone:0422-2311711/4351711Fax:0422-2311611

Mill Nallabandagudem-508206KodadMandalNalgondaDistrictAndhraPradeshPhone:08683-284223,284226

Contents PageNo.

NoticetotheMembers 3DirectorsReportandManagement

Discussion&Analysis 4ReportonCorporateGovernance 7

AuditorsReport 13BalanceSheet 16ProfitandLossAccount 17Schedules 18NotesFormingPartofAccounts 22CashFlowStatement 25

KAKATIYATEXTILESLIMITEDNoticeofAnnualGeneralMeetingNOTICEisherebygiventhatthe26thAnnualGeneralMeetingoftheShareholdersoftheCompanywillbeheldonWednesdaythe24thSeptember2008at11.00AMatElgiTowers,737D,GreenFields,PuliakulamRoad,

Coimbatore-641045,totransactthefollowingbusiness:

OrdinaryBusiness:1.Toreceiveandadopt theBalanceSheetas

at31stMarch2008and theProfitandLoss

Accountfortheyearendedonthatdate,

theReportsoftheDirectorsandAuditors

thereon.

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2.ToappointaDirectorintheplaceof

Mr.SSRKoteswaraRao,whoisretiring

byrotationandbeingeligibleoffershimself

forreappointment.3.ToappointaDirectorintheplaceof

DrIVenkatRao,whoisretiringbyrotation

andbeingeligibleoffershimselffor

reappointment.4.To consider the re-appointment of

M/s.K.Ravi&Co.,CharteredAccountants,

asAuditorstoholdtheofficetillthe

conclusionofthenextAnnualGeneral

Meetingandtofixtheirremuneration.SpecialBusiness:5.ToConsiderandifthoughtfit,topasswith

orwithoutmodification,thefollowing

resolutionasaSpecialResolution.RESOLVEDTHATpursuanttotheprovisio

nsofSection198,269,309,310,316andoth

erapplicableprovisionsreadwithScheduleX

IIIoftheCompaniesAct,1956,MrSumanthRamamurthibeandisherebyappointed

asManagingDirectoroftheCompanyfor

aperiodof3yearsfrom30.05.2008t

o29.05.2011withoutanyremuneration,u

ntilotherwiseresolvedbytheBoardofDirector

s,withsuchpowersandfunctionsastheBoa

rd

ofDirectorsmayfromtimetotimerequirehimtoexercise.

ByOrderoftheBoardCoimbatore SumanthRamamurthi30thMay,2008 ManagingDirector

Notes:1. EVERYMEMBERENTITLEDTOATTENDAND

VOTEATTHEMEETINGISENTITLEDTO

APPOINTAPROXY.SUCHPROXYNEEDNOT

BEAMEMBEROFTHECOMPANY.2.Instrumentappointingaproxyshouldbedepositedattheregisteredofficeofthecompanynotlessthan

48hoursbeforethecommencementofthemeeting.3.Theregisterofmembersandsharetransferbook

ofthecompanywillremainclosedfrom10.09.2008

to24.09.2008bothdaysinclusive.4.Members/proxiesshouldbringtheattendanceslip

dulyfilledinforattendingthemeeting.5.Shareholdersarerequestedtobringthecopyof

annualreporttothemeetingandarealsorequestedtosendtheirqueries,ifany,ontheaccountstothe

registeredoffice.6.Membersarerequestedtoavailthefacilityofconverting

theirphysicalshareholdingintoelectronicmodeof

shareholding(DEMAT)fortheirownconvenience.7.Briefnoteondirectorsseekingreappointmenthas

beengivenintheReportonCorporategovernance.8.TheSpecialBusinessandexplanatorystatement

annexedwiththisreportisthenoticefor

complyingwiththeprovisionsofSection302oftheCompanies

Act,1956.EXPLANATORYSTATEMENT:(PursuanttoSection173(2)oftheCompaniesAct,1956)ItemNo.5MrSumanthRamamurthiwasappointedasManagingDirectoroftheCompanybytheBoardofDirectorsattheirmeetingheldon30.05.2008

for

a

period

of

3

years

with

effect

from30.05.2008withoutanyremuneration,onthetermsandconditionssetoutintheresolutioninItemNo.5.AsperSection269readwithScheduleXIIIoftheCompaniesAct,1956,theappointmentshallbesubjecttotheapprovalof

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theshareholdersofthecompanyingeneralmeeting.Hence,theresolutionisplacedforyourapproval.MrSumanthRamamurthiistheManagingDirectorofM/sSuperSpinningMillsLtd.NoneoftheDirectorsexceptMrSumanthRamamurthi,isinterestedintheresolution.Thetermsoftheappointmentassetoutintheresolutionmayberegardedasanabstractof

thetermsofcontractandmemorandaofinterestforthepurposeofSection302oftheCompanies

Act,1956.ByOrderoftheBoard

Coimbatore SumanthRamamurthi

30thMay,2008 ManagingDirector3

DirectorsReportandManagementDiscussion&AnalysisDearMembers,YourDirectorspresenttheir26thAnnualRep

ortofthecompanyfortheyear2007-08togetherwiththeBalanceSheetasat31stMarch2008andtheProfit&LossAccountfortheyear

endedon

that

date.FinancialResults (Rs.Lacs)Particulars 2007-08 2006-07

Sales/ConversionCharges/otherIncome 908.51

853.53GrossProfitbeforeDepreciation 203.96 151.98andInterestDepreciation 52.06 54.54Interest 110.99 107.20NetProfit/(Loss) 39.31 (9.76)Dividend

Duetoinadequateprofits,nodividendhasbeenrecommendedforthefinancialyear2007-08.

FixedDepositsTheCompanyhasnotaccepted/invitedfixed

deposits.

PerformanceYourCompanyhasearnedatotalincomeofRs.908.51LacsandincurredaprofitofRs.39.31Lacs,ascomparedtotheturnoverofRs.853.53LacsandnegativeprofitofRs.10.43Lacsfortheyear2006-07.MANAGEMENTDISCUSSIONANDANALYSISREPORTIndustryConditionsTextileindustryinIndiaplaysavitalrolein

theIndianeconomyanditscontributiontothegrowthoftheeconomyissignificant.IndiacontinuestobeoneofthedominantplayersintheglobaltextilemarketnexttoChina.Mushroomingofnewunitsbothinorganized

4

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KAKATIYATEXTILESLIMITEDandsmall-scalesectorshascreatedcut-throatcompetitioninthemarket.Duetovolatilenatureoftheindustrytheprofitabilitymarginshave

comedowndrastically.GovernmentofIndiahasfurtherextendedtheTechnologyUpGradationFundSchemeandmostofthespinningunitsareintheprocessofcapacityexpansion/modernization/renovationtoimprovethequalityandquantity.Thecurrencyfluctuationduringtheyearhasalsoaffectedtheexportperformanceoftheindustry.TheGovernmentofIndiaiscontinuouslymonitoringthesituationandpromisedtoextendallthepossiblemeasurestoturntheindustrytopositivemood.Therefore,thefuturescopeofthetextilebusinessispromising.OpportunitiesandThreatsThetextileindustryismuchdependentupontheavailabilityofqualitycottonatcompetitiverates.Wideusageofqualityhybridcottonseedsincludinggeneticallymutatedvarietieshas

resultedinincreasedcottonyieldwhencomparedtotraditionalvarieties.Ontheotherhandthedemand fororganiccotton isspirallinginUSandinotherWesterncountries.Segment

or

Product-wise

performanceTheentireoperationsoftheCompanyrelatetoonlyonesegmentvizTextiles.Therefore,segment/product-wisedetailsarenotapplicablehere.

CompanyOutlookTheCompanyisstillcontinuingtheconversionworkandtheCompanyiswaitingforfavorable

trendtocommenceitsownproduction.Thecompanysproposaltoswitchovertoownproductionhasbeenfurtherdelayedduetopoorrealizationofyarnpricesandfluctuationinavailabilityofqualitycottonatcompetitiveratesinthemarket.RisksandConcernsYour

company

isstill

operating

the

unit

witha

verythinprofitmargin.Themillneedsthesupportoflatesttechnology,whichrequireshugefinancialoutlay.

KAKATIYATEXTILESLIMITEDDirectors

MrSSRKoteswaraRaoandDrIVenkatRaodirectorsofthecompanyretirebyrotationandbeingeligibleofferthemselvesforre-appointment.

MrLGRamamurthi,ChairmanandManagingDirectorofthecompanyhasresignedfromtheboardwitheffectfrom31.03.2008.WedeeplyregrettoinformthemembersaboutthesaddemiseofourbelovedShriL.G.Ramamurthi

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on13thMay2008.ShriL.G.RamamurthiwasaguidingforceoftheCompanyeversincehetookoverasChairmanfromtheyear2006.Heplayedamajorroleinshapingthegrowthand

developmentoftheCompanyandtheBoardplacesitshighestappreciationforhisvaluableservicesrenderedduringhistenure.MrSumanthRamamurthihasbeenappointedastheManagingDirectorofthecompanywitheffectfrom30thMay2008.Auditors

M/sK.

Ravi

&Co,

the

Auditors

of

the

comp

anyretireattheensuingAnnualGeneralMeetingandhavegiventheirconsentforreappointment.

DirectorsResponsibilityStatementPursuanttotherequirementundersection217(2AA)oftheCompaniesAct,1956withrespecttoDirectorsResponsibilityStatement,itisherebyconfirmed:i) Thatinthepreparationoftheaccountsfor

thefinancialyearended31stMarch2008,

theapplicableaccountingstandardshave

beenfollowedalongwithproperexplanation

relatingtomaterialdepartures;ifany.ii) ThattheDirectorshaveselectedsuch

accountingpoliciesandappliedthem

consistentlyandmadejudgmentsand

estimatesthatwerereasonableandprudent

soastogiveatrueandfairviewofthe

stateofaffairsofthecompanyattheend

ofthefinancialyearandofthelossofthe

companyfortheyearunderreview.

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iii)Thatthedirectorshavetakenproperand

sufficientcareforthemaintenanceofadequateaccountingrecords inaccordanc

ewiththeprovisionsoftheCompaniesAc

t, 1956,forsafeguardingtheassetsofthecompanyandforpreventinganddetectin

gfraudandotherirregularities;and

iv)ThattheDirectorshavepreparedthe

accountsforthefinancialyearended31st

March2008onagoingconcernbasis.HumanResourcesEmployer-Employeerelationsremainedcordialduringtheyearunderreview.Asregards,informationpursuanttoSection217(2A)oftheCompaniesAct,1956,therearenoemployeescoveredbythesaidprovisions.InternalcontrolsystemsandtheiradequacyThecompanyhasadequateinternalcontrol

systems.TheManagementaswellasstatutoryauditorstaketheperiodicalreportsofofficer(s)

inchargeofinternalcontrolsystemintoaccount.TheadequacyoftheinternalcontrolsystemsisreviewedbytheAuditCommitteeatperiodicintervals.ReplytotheQualificationsofAuditorsDuetoinadequacyofprofits,thecompanycouldnotprovideforDepreciation&Gratuitypertainingtoearlieryears.Acknowledgement

YourDirectorsplaceonrecordofthesincereappreciationofthecontributionmadebytheemployeesoftheCompanyatalllevels.YourDirectorsfurtherwishtoplaceonrecordtheirappreciationfortheinvaluablesupportgivenbyallotherauthoritiestotheCompany.

OnbehalfoftheBoardSumanthRamamurthiDr.I.VenkataRaoManagingDirectorDirectorCoimbatore

30thMay,

2008

5

AnnexuretoDirectorsReportA.Energyconservationmeasures: Modificationinhumidificationsystemsby

foggingofwaterinspinningplant-househad

resultedinsignificantreductioninpower

consumption.

Compressorair-linemodificationsand

arrestingoftheairleakagesatdifferentdepartmentshelpedtoreducetheenergy

consumption.

Periodicenergycontrolmeasureslike

optimizationofmotorsizesetcarein

progresstoreducetheenergyconsumption.

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KAKATIYATEXTILESLIMITED Renovationofcertainequipmentshasbeen

takenupduringtheyearunderreview,which

wouldreducetheConsumptionofpower.B.Research&Development:

TheCompanyistakingthehelpoftheSouth

IndiaTextileResearchAssociation(SITRA),whichhasbeenundertakingresearcho

nvariousissuesonbehalfofTextileMills.

C.Technologyabsorption,Adaptationand

Innovation:

Periodicup-gradationoftheTop-Roller

loadingsysteminRing-Framesarebeing takentoimproveinproduction&quality.D.Foreignexchangeearnings&outgo:Nil

FORM-AFormfordisclosureofparticularswithrespecttoconservationofEnergy

POWER&FUELCONSUMPTION 31.3.2008 31.3.20071.ELECTRICITY:

a)PURCHASEUnits (KWH) 76,87,023 72,40,157TotalAmount (Rs.) 2,52,33,695 2,38,00,291Rate/Unit (Rs.) 3.28 3.29

b)OWNGENERATIONTHROUGHDIESELGENERATORUnits (KWH) 35,613 71,366UnitsPerLtr.OfDieselOil (KWH) 3.20 3.25Cost/Unit (Rs.) 10.85 10.33

2.HUSK:Quantity (Kgs) Nil NilTotalCost (Rs.) Nil NilAverageCost (Rs.) Nil Nil

3.CONSUMPTIONPERUNITOFPRODUCTION:CottonYarn(40saveragecount) (Kgs.) 18,25,532 17,09,485Electricityconsumed (KWH) 77,22,636 73,11,523ConsumptionperUnitofProduction (KWH) 4.23 4.28

OnbehalfoftheBoardCoimbatore SumanthRamamurthi Dr.I.VenkatRao30thMay,2008 ManagingDirector Director

6

NameoftheDirector Mr SumanthRamamurthi Mr Koteswara

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DateofBirth(Age)DateofappointmentQualifications

Expertiseinspecificfunctionalarea

ShareholdingintheCompany

12.08.1959(49years)30.06.2006BScElectricalEngineer(USA)MorethantwodecadesofexperienceinTextilesandEngineeringIndustries

Holding14,65,506EquitySharesofthecompany

25.03.1943(6518.02.1999CharteredAccoAPracticingChAccountantandofM/sBrammaHehasmorethofexperience inFinance&TaxaNil

NameoftheDirector

AttendanceNo.ofotherCompaniesDirector&Committee

Member/Chairman

BoardMeetings

LastAGM

MrLGRamamurthi(Promoter)*MrSumanthRamamurthi(Promoter&Executive)**MrCSKPrabhu(Independent)

2

5555

No

YesYesYesNo

KAKATIYATEXTILESLIMITEDReportonCorporateGovernanceCompanysphilosophyoncodeofgovernanceCompanyshalladoptselfGoverningCorporateGovernancemodeltoadheretoalltherulesandregulationsofthestatutoryauthorities.Itshallalsodischargeitsduties,responsibilitiesandobligationinafairandtransparentmannerwiththeobjectofmaximizingthevalueofthestakeholdersnamelyshareholders,employees,financialinstitutions,suppliersandbusinesspartners.

BoardofDirectors-Category,Composition,BoardMeetings&AttendanceTheBoardcomprisesofFourDirectorsincludingoneExecutive,Non-ExecutiveandIndependentDirectors.

FiveBoardMeetingwereheldduringtheyearon23.08.2007,22.10.2007,31.01.2008,

16.04.2008

*Resignedfromtheboardon31.03.2008andhewasinExecutivePosition**AppointedastheManagingDirectorwitheffectfrom30.05.2008

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DetailsofDirectorsRetiringByRotationandSeekingRe-Appointment/Appointment

7

NameofDirector NameoftheCompany Positionheld MrSumanthRamamurthi

MrKoteswaraRaoSSRDrIVenkatRao

SuperSpinningMillsLtdElgiElectric&IndustriesLtdElgiUltraIndustriesLtdPrecot-MerdianLtdSaraElgiInsuranceAdvisoryPvtLtdElgiSoftwareandTechnologiesLtdSuperFarmProductsLtdElgiBuildingProductsLtdSaraElgiIndustrialR&DLtdSuperSaraTextilesLtdUnisankyo

Ltd

MPMRecreationAvcadesPvtLtd

ManagingDirectoDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirector

DirectorDirector

NameoftheMember No.ofMeetingsAttendedMrKoteswaraRaoSSRMrCSKPrabhuDrIVenkatRao

4

4

4

KAKATIYA

TEXTILES

LIMITED

AuditCommitteeTheAuditCommitteehasbeenconstitutedasperSection292AoftheCompaniesAct,1956,aspertheGuidelinessetoutintheListingAgreementwiththeStockExchanges.Thetermsofreferenceinclude-q Overseeingfinancialreportingprocesses.q Reviewingperiodicfinancialresults,financialstatementsandadequacyofinternalcontrol

systems.

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q DiscussionwiththeAuditorsaboutthescopeofauditincludingtheirobservations.

TheAuditCommitteeisconsistingof3independentDirectors,ChairedbyShriKoteswar

aRaoSSR.

Duringtheyear4AuditCommitteeMeetingswereheldon23.08.2007,22.10.2007,31.01.2008

and

RemunerationCommitteeTermsofreferenceoftheRemunerationCommitteeinclude:q RecommendationforfixationandperiodicrevisionofcompensationoftheManagingDirector

forapprovalofBoardandq ReviewthesittingfeespayabletotheDirectors.TheRemunerationCommitteeiscomprisingof3independentDirectors,ChairedbyShri

KoteswaraRaoSSR.,ShriCSKPrabhu,andShriDrIVenkatRao,Members.Noremunerationcommitteemeetingwasheldduringtheyear.

8

Year Venue Date&Time 2007 ArdraConventionCentre,

NorthHuzurRoad,Coimbatore. 23.08.20075.00PM Non2006 NallabandagudemVillage,KodadMandal,

NalgondaDistrict,AndhraPradesh 29.09.20064.00PM AppoMrLChaChaTranSpec

2005 NallabandagudemVillage,KodadMandal,NalgondaDistrict,AndhraPradesh

30.09.2005

11.00AM NonNameoftheMember No.ofMeetingsAttendedMrCSKPrabhuMrLGRamamurthiMrSumanthRamamurthi

13

5

13

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KAKATIYATEXTILESLIMITEDTheCompanyhasnotpaidanyremunerationtoitsChairmanandManagingDirector.TheDirectorsarepaidsittingfeeattherateofRs.2000/-forattendingeachBoardmeetingandRs.500/-for

AuditCommitteesoftheBoard.TheDirectorsarenotpaidanycommission.TherewerenootherpecuniaryrelationshipsortransactionoftheDirectorsvis--visthecompany.

ThecompanyhasnotgrantedanystockoptiontoanyofitsDirectors.*Shareholders/InvestorGrievanceCommittee.TheShareholders/InvestorsGrievanceCommitteewascomprisingofMrLGRamamurthi,MrCSKPrabhu,MrKoteswaraRaoSSR,DrIVenkatRao,andMrSumanthRamamurthi.

Duringtheyear13meetingswereheldon:09.07.07,03.08.07,09.08.07,10.09.07,25.09.07,09.10.07,17.10.07,28.11.07,10.12.07,

17.01.08,06.02.08,03.03.08and25.03.08.*ConsequentupontheresignationofMrLGRamamurthifromtheboard,thecommitte

ehasbeenre-constituted,andnowthecommitteeiscomprisingofMr.CSKPrabhu,Mr.KoteswaraRaoSSR,

InvestorgrievanceredressalDuringtheyearthecompanyhadreceived4complaintsfromtheshareholdersandthe

samehavebeenredressedtothesatisfactionoftheshareholders.Therewerenocomplaintsoutstandingason31.03.2008.Thenon-executivedirectorsarenotholdinganysharesofthecompany.GeneralBodyMeetings

9

KAKATIYATEXTILESLIMITED

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Disclosure

(A)RelatedPartyTransactionsDisclosuresonmateriallysignificantrelatedpartytransactionsi.e.transactionsmadebytheCompanyofmaterialnature,withitspromoters,theDirectorsorthemanagement,theirsubsidiariesorrelativesetcthatmayhavepotentialconflictwiththeinterestoftheCompanyatlarge.

Noneofthetransactionswithanyoftherelatedpartieswereinconflictwiththeinterestof

theCompany.(B)CompliancesbytheCompanyDetailsofnon-compliancebytheCompany,penalties,stricturesimposedontheCompanybyStockExchangeorSEBI,oranystatutoryauthority,onanymatterrelatedtocapitalmarketduringthelastthreeyears.

SEBIimposedapenaltyofRs.1lacforthefailuretocomplywiththedisclosurerequirements

bytheerstwhilepromotersunderRegulation8(3)ofSEBI(SubstantialAcquisitionofShares

andTakeovers)Regulations,1997duringtheyears1999to2004,whichwaspaidin2007.(C)ShareholdersRightsMeansofCommunicationThequarterly,half-yearlyandannualresultsofthecompanyarepublishedintheEnglish,Tamilnewspapersviz.,TheFinancialExpressandMaalaimalar.TheCompanyhasnotmadeanypresentationtoanyInstitutionalInvestorsandanalystsduringtheyear.GeneralShareholdersinformationAnnualGeneralMeeting:

Date : 24.09.2008

Time : 11AMVenue : ElgiTowers

737D,GreenFieldsPuliakulamRoadCoimbatore641045.

FinancialCalendar : April01toMarch31.DateofBookClosure : 10.09.2008to24.09.2008(bothdaysinclusive)ListingonStockExchange : BombayStockExchangeLtd

HyderabadStockExchangeLtdStockCodes/Symbol :BombayStockExchangeLtd : 521054HyderabadStockExchangeLtd: 545/KAKTEX$

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TradingofsharesatBSEhasbeensuspendedfromtheyear2003onwardsduetonon-complianceofvariousclausesoflistingagreementbytheerstwhilepromotersandnowtheCompanyhascompliedwithalltheclausesoflistingagreementandthecompanyisactivelyengagedinthe

10

No.ofShares Shareholdersnum er

Percentage No.1-500

501-10001001-20002001-30003001-40004001-5000

5001-1000010001-Above

997040913829149

1410

94.11883.86101.30270.27380.13220.08500.13220.0944

Total 10593 100.0000 Category No.ofShares PercentagePromotersHoldingsMutualFunds/UTIBanks/Financial/InstitutionsBodiesCorporatesIndividualShareholdingupto1lacIndividualShareholdingof

2977094324001000

2223002457206118000

2600

51.2360.5580.0173.826

42.2882.0310.045

Total 5810600 100.00

KAKATIYATEXTILESLIMITEDprocessofgettingthesuspensionrevoked.Thelistingfeeandannualcustodialfeefortheyear2008-09hasbeenalreadypaidfor.ThesharesofthecompanyareveryinfrequentlytradedatHyderabadStockExchangeand,therefore,thecompanyisunabletofurnishthedataonhigh&lowquotationsmonthwise.ShareTransferSystem

AlltheapplicationsreceivedeitherfortransferordematerializationisbeingprocessedonlyaftergettingtheapprovalfromthemembersoftheShareholdersCommittee.ShareholdingpatternasonMarch31,2008

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TheCompanyssharescanbetradedindematerializedformandareavailablefortradingonboththedepositoriesinIndiaviz.,NationalSecuritiesDepositoryLimited(NSDL)andCentralDepositoryServices(India)Limited(CDSL).EquitysharesoftheCompanyrepresenting10.66%oftheCompanyssharecapitalaredematerializedasonMarch31,2008.UndertheDepositorySystem,theInternationalSecuritiesIdentificationNumber(ISIN)allottedtotheCompanyssharesisINE092E01011.CEOCertificateCertificateinrespectoffinancialstatements,accountingpolicies&internalcontrolforthefinancialyear2007-08wasgiventotheBoardbytheChairmanandManagingDirector.

11

KAKATIYATEXTILESLIMITEDPlantLocation:Nallabangudem-508206,KodadMandal,NalgondaDistrict,

AndhraPradesh.Phone:08683-284223&284226.AddressforCorrespondence:

RegisteredOffice:MrRSrinivasanCompanySecretaryandComplianceOfficerKakatiyaTextilesLtdElgiTowers,737D,GreenFieldsPuliakulamRoad,Coimbatore641045.e-mail:investorskaktex@ssh.saraelgi.com

Registrar&ShareTransferAgent:IntimeSpectrumRegistryLimitedSurya,35,MayflowerAvenue,BehindSenthilNagarSowripalayam,Coimbatore641028e-mail:coimbatore@intimespectrum.comPhone:0422-2314792

Phone:0422-2311711/4351711Fax :0422-2311611

CodeofConductTheCodeofconductforBoardMembers,SeniorManagementPersonnelandtheEmployeesofthecompanywhichisbeingfollowedwillbesoonpostedonthewebsiteofthecompany.

DECLARATION

AsprovidedunderClause49oftheListingAgreementwiththeStockExchanges,allBoard

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MembersandSeniorManagementPersonnelhaveaffirmedcompliancewithKakatiyaTextilesLimitedcodeofBusinessConductandEthics.Coimbatore SumanthRamamurthi30th May, 2008 Managing Director

CERTIFICATE

ToThemembersofKakatiyaTextilesLtd.,WehaveexaminedthecomplianceofconditionsofCorporateGovernancebyKakatiyaTextilesLimited,totheyearendedon31stMarch,2008,asstipulatedinClause49oftheListingAgreementofthesaidCompanywithstockexchange(s).TheComplianceofconditionsofcorporategovernanceistheresponsibilityofthemanagement.Ourexaminationwaslimitedtoproceduresandimplementationthereof,adoptedbytheCompanyforensuringthecomplianceoftheconditionsoftheCorporateGovernance.Itisneitheranauditnoranexpressionofopiniononthefinancialstatementsofthecompany.Inouropinionandtothebestofourinformationandaccordingtotheexplanationsgiventous,wecertifythattheCompanyhascompliedwiththeconditionsofCorporateGovernanceasstipulatedintheabove-mentionedListingAgreement.Westatethatnoinvestorgrievance(s)ispendingforaperiodexceedingonemonthagainsttheCompanyaspertherecordsmaintainedbytheShareholders/InvestorsGrievanceCommittee.WefurtherstatethatsuchcomplianceisneitheranassuranceastothefutureviabilityoftheCompanynortheefficiencyoreffectivenesswithwhichthemanagementhasconductedtheaffairsoftheCompany.

ForK.RAVI&Co.,CharteredAccountants

Coimbatore S.SIVAM30thMay,2008 Partner MembershipNo.207579

12

KAKATIYATEXTILESLIMITEDAuditorsReportTheMembersofKakatiyaTextilesLimited

WehaveauditedtheattachedBalanceSheetofyourcompanyasat31stMarch2008andtheProfitandLossAccountandCashFlowStatementoftheCompanyannexedtheretofor

theTwelve-monthperiodendedonthatdate.Thesefinancialstatementsaretheresponsibilityof the Companysmanagement. Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedinIndia.

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ThoseStandardsrequirethatweplanandperformtheaudittoobtainreasonableassurance about whether the

financialstatementsarefreeofmaterialmisstatement.

Anauditincludesexamining,onatestbasis,evidencesupporting the amounts

anddisclosures inthe financialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagementaswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditprovidesareasonablebasisforouropinion.1. AsrequiredbytheCompanies(Auditors

Report)Order,2003,issuedbytheCentral

GovernmentintermsofSection227(4A)

oftheCompaniesAct,1956,weannex

heretoastatementonthemattersspecified

inparagraph4and5ofthesaidorder.2. Furthertoandsubjecttoourcommentsin

Annexurereferredtoinparagraph1above,

andsubjecttothenotesonaccounts,we

reportthat:a)Wehaveobtainedalltheinformati

onandexplanationswhichtothebesto

four knowledge and belief

were

necessaryfor

the

purpose

of

our

audit;

b)Inouropinionsubjecttothenoteon

accountingfordepreciationandgratuityasgiveninthereport,properbooksofaccount,asrequiredbyla

whavebeenkeptbythecompanys

o

farasappearsfromourexamination

ofthosebooks.

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c)TheBalanceSheet,ProfitandLoss

accountandcashflowstatementdealtwithbythisreportareinagreementwiththebooksofaccounts.

d)Inouropinionandsubjecttothenoteonaccountingfordepreciationandgratuityasgiveninthereport,theProfitandLossAccount,BalanceSheetandCashFlowStatementcomplywit

htheAccountingStandardsreferredtoi

nsub-section(3C)ofSection211ofth

eCompaniesAct,1956.

e)Onthebasisofwrittenrepresentations

receivedfromthedirectors,ason31stMarch2008,andtakenonrecordbytheBoardofDirectors,wereportthatnoneofthedirectorsaredisqualifiedason31stMarch2008frombeingappointedasadirectorintermsofclause(g)ofsub-section(1)ofSection274oftheCompaniesAct,1956.

f)Inouropinionandtothebestofour

informationandaccordingtotheexplanationsgiventous,thesaidaccountsgivetheinformationrequiredbytheCompaniesAct,1956inthemannersorequiredandsubjecttothenoteonaccountingfordepreciationand

gratuity

as

given

in

the

report,giveatrueandfairviewinconformity

withtheaccountingprinciplesgenerally

acceptedinIndiai.InthecaseoftheBalanceSheet,

ofthestateofaffairsofthecompanya

sat31stMarch,2008and

ii.InthecaseoftheProfitandLossAccount, ofthelossofthecompanyasat31st

March2008periodendedonthatdate.

iii.Inthecaseofcashflowstatement,of

thecashflowsfortheyearendedas

onthatdateNotesreferredtoinparagraphs(b)(d)and(f)above1.Depreciation:Thecompanyhasnot

provideddepreciationonfixedassetsfor

theperiod1-4-2001to31-3-2006.Thisis

notinaccordancewithAccountingStandard

13

6DepreciationAccountingissuedbyt

heInstituteofCharteredAccountantsofIndi

a.

As

a

result,

the

accumulated

depreciationand accumulated losses are

eachunderstatedbyRs.2,56,71,744/-.Then

etfixedassetsisoverstatedbythesam

eamountduetothenon-provisiono

fdepreciation.

2.Gratuityliability:Gratuityexpenseforthe

yearisaccountedonlytotheextentof

amountpaidduringtheyeartothefund

managedbyLIC.Thepaymentwasmadeaccordingtotheannualcontributionto

thegratuityfundasadvisedbyLIC.T

he

AnnexuretotheAuditorsReport(AsrequiredbyCompanies(AuditorsReport)Order,2003andreferredtoinParagraph3of

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ourreportofevendate)(i) (a)Thecompanyismaintainingrecords

containingquantitativedetailsandlocationoffixedassets.However,additionaldetailssuchascost,year

of

purchaseetc.,havetoberecordedtoensuremaintenanceofproperrecord

swithfullparticularsoftheassets.

(b)Asperinformation&explanationgiven

tous,theassetshavebeenphysically

verifiedbythemanagementduringthe

yearandthereisaregularprogramme

ofverificationwhich,inouropinion,isreasonablehavingregardtothesize

ofthecompanyandthenatureofitsasset

s.(c)Duringtheyear,thecompanyhasn

otdisposedanymajorassets.

(ii) (a)Themanagementhasphysicallyverified

theinventoriesduringtheyear,atregular intervalswhicharereasonabletosize

&natureofthecompany.(b)Theproceduresofphysicalverificati

onof inventories followed by

themanagementarereasonableandadequateinrelationtothesizeoft

hecompanyandthenatureofitsbusiness

.

14

KAKATIYATEXTILESLIMITEDaccountingofgratuityexpensefortheye

aronlytotheextentofpaymentmadeis

notinaccordancewithaccrualmethod

of

accounting.ThisisalsonotinaccordancewithAccountingstandard15Employ

eebenefits.Asaresult,theprovisionf

orgratuitytotheextentofRs.17,55,306/-

isnotmadeinthebooks.

ForK.RAVI&Co.,CharteredAccountants

S.SivamCoimbatore Partner30thMay,2008 (M.No207579)

(c)Thecompanyismaintainingproper

recordsofinventory.Thediscrepancies

noticedonverificationbetweenthe

physicalstocksandthebookrecords

werenotmaterial.(iii)(a)Thecompanyhastakenunsecured

loansfromthepartiescoveredunder

section301oftheCompaniesAct,

1956.Theamountofloanstakenfrom

thepartiescoveredunder301register

areasunderNoofpartiesAmountinvolved

1Rs.10,00,000(b)Therateofinterestandotherter

msandconditionsofloanstakenbyth

ecompanyarenotprimafacieprejudicia

ltothecompany

(c)Weareunabletocommentonthe

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regularityofrepaymentofinterestand

principalontheseamountsduringthe

year,asthereisnostipulationregardingrepaymentasperthetermsofthe loan.

(d)Thereisnostipulationregardingrepaymentoftheloanaspertheterm

s oftheloan.Accordingtotheinformationandexplanationsgiventous,the

repaymentofthe loan isnotdueduring

theyearasperthetermsoftheloan.(iv)Inouropinionandaccordingtothe

informationandexplanationsgiventous,

KAKATIYATEXTILESLIMITEDthereareadequateinternalcontrolprocedurescommensuratewiththesiz

eofthecompanyandthenatureofit

sbusinesswithregardtopurchaseso

finventory,fixedassetsandwithregardt

othesaleofgoods.Duringthecourse

ofouraudit,wehavenotobservedan

ycontinuingfailuretocorrectmajo

rweaknessesininternalcontrols.

(v) Asperinformation&explanationgivento usthecompanyhasenteredallthe

transactionswiththepartiestobeentered

under301register.Inouropinionand

accordingto the information andexplanationsgiventous,eachofthes

etransactionshavebeenmadeatprice

s,whicharereasonablehavingregardtot

he

prevailingmarketpricesattherelevanttime(vi) Duringtheyearunderaudit,theCompany

hasnotaccepteddepositsfrom thepublic.(vii)Duringtheyear,thecompanyhasinternal

auditsystemcommensuratewithitssize

andnatureofitsbusiness.(viii)Thecompanyhasmade&maintains

costingrecordsprescribedundersection

209(1)(d)oftheCompaniesAct,1956.(ix) Asperinformation&explanationgivento

usthecompanyisregularindepositing

withappropriateauthoritiesundisputed

statutoryduesincludingprovidentfund,

salestax,andothermaterialstatutory

duesapplicabletoit.(x) Inouropinionandasperinformation&

explanationgiventousthecompanyhas

accumulated loss inexcessoffiftypercent

ofitsnetworth.Thecompanyhasnot

incurredcashlossduringthefinancialyear

andinimmediatelyprecedingfinancialyear.(xi) Inouropinionandaccordingtothe informationandexplanationsgiventous,

thecompanyhasnotdefaultedin

repaymentofdues toa financial institution

orbankordebentureholders.(xii)Inouropinionandaspertheinformation

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andexplanationsgiventous,thecompany

hasnotgrantedanyloansandadvances

onthebasisofsecuritiesbywayofpledge

ofshares,debenturesandothersecurities.(xiii)Inouropinion,thecompanyisnotachit

fundor

a

nidhi

mutual

benefit

fund

/society.

Therefore,theprovisionsofclause4(xiii)

of theCompanies(AuditorsReport)Order,

2003arenotapplicabletothecompany.(xiv)Inouropinion,thecompanyisnotdealing

inortradinginshares,securities,

debenturesandotherinvestments.

Accordingly,theprovisionsofclause4(xiv)of theCompanies(AuditorsReport)Ord

er,2003arenotapplicabletothecompan

y.(xv)Accordingtoinformationandexplanations

giventous,thecompanyhasnotgiven

anyguaranteeforloanstakenbyothers

frombanksorfinancialinstitutions(xvi)Inouropinionandaspertheinformation

andexplanationsprovidedtous,theterm

loanshavebeenappliedforthepurpose

forwhichtheywereraised.(xvii)Accordingtotheinformationand

explanationsgiventousandonanoverall

examinationofthebalancesheetofthe

company,wereportthatnofundsraised onshort-termbasishavebeenusedfor

long-terminvestment.(xviii)Duringtheyearthecompanyhasnot

madeanypreferentialallotmentofshares

topartiesandcompaniescoveredinthe

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registermaintainedundersection301of

theAct(xix)Duringtheyearthecompanyhasnot

issuedanydebentures(xx)Thecompanyhasnotraisedanymoney bypublicissue(xxi)Inouropinion,andaccordingtothe

informationandexplanationsgiventous,

nofraudonorbythecompanyhasbeen

noticedorreportedduringthecourseof

ouraudit.ForK.RAVI&Co.,

CharteredAccountantsS.Sivam

Coimbatore Partner30thMay,2008 (M.No207579)

15

KAKATIYATEXTILESLIMITEDBalanceSheetasat31stMarch,2008

Schedules 31.3.2008 31.3.2007AmountinRs. AmountinRs.

I SOURCESOFFUNDS1.ShareholdersFunds

a.ShareCapital 1 107,845,500 107,845,5002.LoanFunds

a.SecuredLoans 2 82,000,000 102,500,000b.UnsecuredLoans 3 19,029,038 18,029,038

TOTAL 208,874,538 228,374,538II APPLICATIONOFFUNDS1.FixedAssets 4

GrossBlock 155,021,893 153,136,265Less:-Depreciation 65,014,281 59,808,251NetBlock 90,007,612 93,328,014

2.CurrentAssetsInventories 5 2,820,251 10,878,993

CashandBankBalances 6 1,292,315 1,772,008Deposits,Loans&Advances 7 11,593,086

9,242,960SubTotal 15,705,651 21,893,961LESS:CurrentLiabilitiesAndProvisionsCurrentLiabilities 8 30,302,638 25,505,206Provisions 4,466,240 3,203,332

SubTotal 34,768,878 28,708,538NetCurrentAssets (19,063,227) (6,814,577)

3.ProfitAndLossAccount 9 137,930,153 141,861,101

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TOTAL 208,874,538 228,374,538

Schedules1to9andnotesonaccountsformpartofthisBalanceSheetAsperourreportofevendateattached ForandonbehalfoftheBoardForK.Ravi&Co.CharteredAccountantsS.SIVAM SUMANTHRAMAMURTHI Dr.I.VENKATRAOPartner

(M.No.

207579) Managing

Director Director

Coimbatore30thMay,2008

16

R.SRINIVASANCompanySecretary

KAKATIYATEXTILESLIMITEDProfit&LossAccountfortheyearended31stMarch,2008

Schedules 31.3.2008 31.3.2007AmountinRs. AmountinRs.

Income

GrossReceiptsCottonSales 7,458,701 7,879,455ConversionChargesReceived 82,890,024 76,696,488OtherIncome 10 502,196 778,948TOTAL 90,850,921 85,354,891

Expenditure

DirectManufacturingExpenses 11 33,977,689 40,311,622PersonnelExpenses 12 20,649,867 17,911,022Interest&FinancialCharges 13 11,213,120 10,720,184General&AdministrativeExpenses 14 15,827,225

11,933,789

TOTAL 81,667,901 80,876,618

Profitbeforedepreciation 9,183,020 4,478,273Depreciation 5,206,030 5,454,104Profitafterdepreciation 3,976,990 (975,831)

Add:FringeBenefitTax 46,042 67,490ProfitAfterTax 3,930,948 (1,043,321)BalanceCarriedforwardfromLastyear (141,861,101) (142,567,780)Balancecarriedforwardtobalancesheet (137,930,153) (141,861,101)Basicearningspershare(inRs.) 0.68 (0.18)

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Schedules10to14andnotesonaccountsformpartofthisProfit&LossAccount.Asperourreportofevendateattached ForandonbehalfoftheBoardForK.Ravi&Co.CharteredAccountantsS.SIVAM SUMANTHRAMAMURTHI Dr.I.VENKATRAOPartner(M.No.207579) ManagingDirector Director

Coimbatore30thMay,2008 R.SRINIVASANCompanySecretary

17

KAKATIYATEXTILESLIMITEDSchedulesFormingPartofBalanceSheet

Asat31.3.2008 Asat31.3.2007AmountRs. AmountRs.

ShareCapital Schedule-1Authorised

65,00,000EquitySharesofRs.10each 65,000,000 65,000,0005,00,0009%CumulativePreferenceShares 50,000,000 50,000,000Redeemableatpar.Earliestdateofredemption24-1-2010Total 115,000,000 115,000,000

Issued,SubscribedandPaidup58,10,600Equitysharesof 10/-each 58,106,000 58,106,000Less:CallsinArrearsfromothers 260,500 260,500

57,845,500 57,845,5005,00,0009%RedeemableCum.Preferenceshares 50,000,000

50,000,000

Total 107,845,500 107,845,500

SecuredLoans Schedule2FromUTIBank 82,000,000 102,500,000Total 82,000,000 102,500,000

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UnsecuredLoans Schedule3UnsecuredLoansfromDirectors 19,029,038 18,029,038Total 19,029,038 18,029,038

Inventories Schedule5(QualitiesandValuesascertifiedbytheManagement)StockofCotton 7,459,047Stroes,SparesandOthers 2,820,251 3,419,946Total 2,820,251 10,878,993

CashAndBankBalances Schedule6CashinHand 345,721 109,961BankBalances

AndhraBank 568,023 571,508UTIBank 378,571 1,090,540Total 1,292,315 1,772,009

18FixedAssets(AmountRs)

Particulars GrossBlock DepreciationBlock NetBloAsat1-4-2007

Additions

Deletion

Asat31-3-2008

Upto1-4-2001

Depreciationforperiod- -

For2006-07

Total For2007-08

Onassetsdeleted in

Upto31-3-2008

Asat31-3-2008

As31-3-2007

Land 1,18 1,18 1,18 1,1

Buildings-Factory 24,01 89 24,10 5,77 1,91 521 6,29 53 6,82 17,27 17,7Buildings-Nonfac 8,05 32 8,08 886 321, 96, 982 110 1,09 6,99 7,0Plant&Machinery 105,8 1,94 35 107,4 43,19 21,4 4,17 47,37 3,83 16, 51,2 56,193 58,4ElectricalInstalat 10,9 13 11,08 3,22 1,56 537 3,76 58 4,34 6,73 7,18OfficeEquipment 1,31 1,31 583 99, 28,3 612 28 64 676 70Computers 94 34 983 164 248 78, 242 77, 32 663, 70

Furniture&fittings 58 586 329 46, 12,0 341 12, 35 232, 24Vehicle 257 257 195 6,6 4, 199, 4, 20 52, 5

AmountinRs31.03. 153,1 2,2 35 155,0 54,35 25,6 5,45 59,8 5,18 16, 65,0 90,0 93,3AmountinRs31.03. 143,1 11,0 1,03 153,1 54,3 5,4 19, 85,4

KAKATIYATEXTILESLIMITEDAsat31.3.2008 Asat31.3.2007

Rs. Rs.Deposits,LoansAndAdvances Schedule7

AdvancesforCapitalgoods/StoresPurchase 2,806,643 2,122,932StaffAdvance 425,858 283,070

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Loans&Advance 223,387TDSReceivables 3,773,721 1,892,080PrepaidExpenses 314,855 449,482DepositswithElectricityandotherauthorities 4,272,009 4,272,009Total 11,593,086 9,242,960

CurrentLiabilities Schedule8SundryCreditorsforpurchases 27,239 345,499CreditorsforServices&Expenses 14,200

AdvancesfromCustomers-SSML 27,779,167 23,726,941Duties&TaxPayable 43,691 53,805InterestaccruedbutnotdueonUTITermloan 979,367OtherLiabilities 2,452,541 385,394Total 30,302,638 25,505,206

ProfitAndLossAccount Schedule9Lossfromearlieryears 143,611,101 142,567,780Profit

during

the

year 3,930,948 1,043,321Less:GeneralReserve 1,750,000 1,750,000

Total 137,930,153 141,861,101

SchedulesFormingPartofProfit&LossAccount 31.3.200831.3.2007

Rs. Rs.

OtherIncome Schedule10MiscellaneousIncome 251,214 527,965Interestearned 250,982 250,982Total 502,196 778,948

DirectManufacturingExpenses Schedule11Consumptionofcotton 8,058,742 14,239,347Packingmaterialandconsumables 29,407 700,434PowerandFuel 25,889,540 25,371,841Total 33,977,689 40,311,622

20

KAKATIYATEXTILESLIMITED31.3.2008 31.3.2007

Rs. Rs.

PersonnelExpenses Schedule12Salaries&WagesandOtherAllowances 16,789,279 14,017,565ContributiontoProvidentfundandGratuityfund 1,872,035 1,514,410SettlementsalariesandpaymentstoVRSoptees 1,002,930EmployeesWelfareExpenses 1,988,553 1,376,117Total 20,649,867 17,911,022

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Interest&FinancialCharges Schedule13InterestOnUTItermloan 11,098,600 10,345,978BankCharges&Commission 114,520 374,206Total 11,213,120 10,720,184

General&AdministrativeExpenses Schedule14TravellingExpenses 112,740 124,903Printing&Stationery 144,982 184,452RepairsandMaintenancePlantandMachinery 12,494,949 7,233,254Buildings 513,590 1,339,454Others

FreightInward 338,582 759,906OtherManufacturingexpenses 118,491 212,990Insurance 584,183 316,846RatesandTaxes 172,087 215,248Rent 48,000 48,000AuditfeesStatutoryAudit 100,000 100,000TaxAudit 20,000 20,000ServiceTax 14,832 14,832Legal&ProfessionalCharges 191,085 133,047Postage,Telegrams&Telephones 259,885 340,797VehicleExpenses 197,854 258,198GeneralExpenses 515,965 631,862Total 15,827,225 11,933,789

21

KAKATIYATEXTILESLIMITEDNotesformingPartoftheAccounts1.SignificantAccountingPolicies

(a)Accountingconvention:Subjecttothenotesonaccounts,theFinancialStatementshave

beenprepared

under

the

historical

cost

convention

inaccordance

with

generally

accepted

accountingprinciplesinIndia,theapplicableAccountingStandardsreferredtoinsub-

section(3C)ofSection211oftheCompaniesAct,1956.(b)Inventoryaccounting:InventoriesofRawMaterials,WorkinProcess,Finishe

dGoods,StoresandSparesarestatedatcostornetrealisablevalue,whicheverisl

ower,inaccordancewithAccountingStandard2issuedbyTheInstituteofCharteredAc

countants

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date,ifthereisanyindicationofimpairmentbasedoninternal/externalfactors.Anasset

isimpairedwhenthecarryingamountoftheassetexceedstherecoverableamount.An

impairmentlossisnormallychargedtotheProfit&LossAccountintheyearinwhichan

22

KAKATIYATEXTILESLIMITEDassetisidentifiedasimpaired.Animpairmentlossrecognisedinprioraccountingperiodsis

reversedincurrentaccountingperiodsiftherehasbeenachangeintheestimateofthe

recoverableamount.(h)ContingenciesandProvisions:Provisionsinvolvingsubstantialdegreeofesti

mationinmeasurementarerecognisedwhenthereisapresentobligationasaresultofpa

stevents

anditisprobablethattherewillbeanoutflowofresources.ContingentLiabilitiesarenotrecognisedbutaredisclosedintheNotes.ContingentAssetsareneitherrecog

nisednordisclosedintheFinancialStatements.

(i)EarningsperShare:BasicEarningsperShareiscalculatedbydividingtheNetprofit/loss

attributabletotheEquityShareholdersbytheweightedaveragenumberofEquityShares

outstandingduringtheyear.2.Thecompanyhasnotprovideddepreciationonfixedassetsfortheperiod1-4-2001to31-3-2006.

This

is

not

in

accordance

with

Accounting

Standard

6

DepreciationAccounting

issuedbytheInstituteofCharteredAccountantsofIndia.Asaresult,theaccumulateddepreciationand

accumulatedlossesareeachunderstatedbyRs.2,56,71,744/-.Thenetfixedassetsis

overstatedbythesameamountduetothenon-provisionofdepreciation.3.Thecurrentyeardepreciationiscomputedonwrittendownvaluebasisontheaggregateof

netblockofassetsatthebeginningoftheyearandadditionsduringtheyear,afterdeducting

fromthegrossblockofassetsasperbooks,theaccumulateddepreciationincludingthe

amountofaccumulateddepreciationnotprovidedasstatedinnote2above.4.ThetermloanfromUTIBankwithanoutstandingbalanceofRs.8.20Croresissecuredbya

firstchargeonthepresentandfuturefixedassetsofthecompanyandsecondchargeonthe

presentandfuturecurrentassetsofthecompany.Theloanisguaranteedbytwoofthe

directorsofthecompany.5.Depreciationprovidedforincometaxpurposeslessthandepreciationforthecurrentyearas

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perbooks.Thecompanyhasbroughtforwardlossesandunabsorbeddepreciationunder

incometax.DeferredtaxassetisnotrecognizedfollowingtherequirementsofAccounting

Standard-22.6.IntheopinionoftheBoard,theCurrentAssets,Loans&AdvancesandotherReceivableshave

atleastthevalueasstatedintheBalanceSheet,ifrealizedintheordinarycourseofbusiness.7.Thecompanydoesnothaveanyduestosmallandmediumenterprises8.ThecompanydoesnothaveanyliabilitytowardsinterestunderMicro,SmallandMedium

EnterprisesAct,2006,asithasnotdelayedpaymentstopartiesdefinedtobeMicro,Small

andMediumEnterprisesunderthesaidAct9.Therewerenoimportsorforeigncurrencypaymentsmadebythecompanyduringtheyear10.Previousyearfigureshavebeenregrouped/rearrangedwherevernecessaryinlinewiththe

presentation

of

current

year

figures11.Contingentliabilities:Dividendon5,00,0009%cumulativepreferencesharesofRs.100each

isinarrears.12.Manufacturingcapacity

31-3-2008 31-3-2007LicencedCapacity NA NAInstalledcapacity 18144Spindles 18144Spindles

Actualproduction 9.43Lakhkgs 9.51Lakhkgs23

Party Natureoftransaction

31-03-2008 31-03-2007

Volumeofransac

Balanceasat

- -

Volumeofransac

Balanceasat

- -SuperSpinningMillsLimitedSuperSpinningMillsLimitedElgiElectricandIndustriesLimited

YarnConversion

YarnsalesStorespurchase

Storespurchase

8,28,90,024

69,25,967

35,557

2,11,533

3,32,800

2,77,65,667

Nil

Nil

Nil

7,66,96,488

78,79,755

72,009

147081

2,37,26,941

Nil

Nil

Nil

KAKATIYATEXTILESLIMITED13.Turnoverdetails

31-03-2008 31-03-2007Classofgoods Quantity AmountinRs. Quantity AmountinRs.SalesCotton 95,764Kgs 74.59Lakhs 1,50,965Kgs78.79Lakhs

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ConversionCharges 942,725Kgs 828.90Lakhs 950,877Kgs766.96Lakhs

14.Rawmaterials(inRupees)Cotton 31-03-2008 31-03-2007OpeningStock 74,59,047 NilPurchase Nil 1,50,51,737ClosingStock Nil 74,59,047

15.RelatedpartydisclosureasrequiredbyAccountingStandard-181.Namesofrelatedpartiesanddescriptionofrelationshipa)KeyManagementPerson :Mr.L.G.Ramamurthi,

Ex-Chairman&ManagingDirectorNoremunerationpaidtoMr.L.G.Ramamurthi

b)RelativeofKeymanagementpersonnel:Mr.SumanthRamamurthic)Otherrelatedparties :SuperSpinningMillsLimited

ElgiElectricandIndustriesLimitedElgiUltraIndustreisLimitedSaraElgiEnvirotechLimited

31-3-2008 31-3-2007Basic&Dilutedearnings(Loss) Rs.9.49Lakhs Rs.10.43LakhsWeightedaveragenumberofequityshares 57,84,550 57,84,550NomineeValueofEquityShares Rs.10 Rs.10Earningspershare Rs.0.68 Rs.(0.18)

17.ForeignexchangeEarnings :NIL24

KAKATIYATEXTILESLIMITEDCashFlowStatementfortheyearended31stMarch2008

2007-2008 2006-2007Rs. Rs. Rs. Rs.

A.CashFlowfromoperatingactivities:NetProfitbeforetaxandextraordinaryitems 3,930,948 (1,043,321)Add:AdjustmentsInP&LDepreciation 5,206,030 5,454,104

InterestPayments 11,098,600 10,720,184OperatingProfitbeforeworkingcapitalchanges 16,304,630 16,174,288(Increase)/Decrease inInventory 8,058,742 (8,642,241)(Increase)/Decrease inDebtors - 8,950,027(Increase)/DecreaseinDeposits (2,350,126) (3,347,957)(Increase)/DecreaseinCurrentLiability4,797,432 (9,954,993)(Increase)/DecreaseinProvision 1,262,908 3,203,332

28,073,586 6,382,456NetCashFlowfromoperatingactivities 32,004,534 5,339,135

-

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B.CashFlowfromInvestingactivities:Purchaseoffixedassets (2,236,028) (11,022,069)Saleoffixedassets 350,400 1,030,400Netcashusedforinvestingactivities (1,885,628) (9,991,669)

C.CashFlowfromfinancingactivities:Longtermborrowings-Secured (20,500,000) 43,757,092Unsecuredloans&Others 1,000,000 (27,085,034)InterestPaid (11,098,600) (10,720,184)Netcashflowfromfinancingactivities (30,598,600) 5,951,874NetIncrease/(Decrease)incashandcashequivalent (479,694) 1,299,340CashAndCashEquivalentsAsAt31.03.2007 1,772,009 472,669CashAndCashEquivalentsAsAt31.03.2008 1,292,315 1,772,009

ForandonbehalfoftheBoardCoimbatore SUMANTHRAMAMURTHI Dr.I.VENKATRAO R.SRINIVASAN30thMay,2008 ManagingDirector Director CompanySecretary

AUDITORSCERTIFICATEWehaveverifiedtheabovecashflowstatementofKakatiyaTextilesLimitedderivedfromtheAnnualFinancialStatementsfortheyearended31.03.2008andfoundthesametobedrawninaccordancewithandalsowiththerequirementsofclause32ofthelistingagreementswithstockexchange.

ForK.Ravi&Co.CharteredAccountants

Coimbatore S.SIVAM30thMay,2008 Partner (M.No.207579)

25

KAKATIYATEXTILESLIMITEDBalanceSheetAbstractandCompany'sGeneralBusinessProfileI. Registrationdetails

RegistrationNo : 3159Statecode : 01Balancesheetdate : 31.03.2008

II. Capitalraisedduringtheyear(AmountinLakhs)Publicissue : NilRights

issue : NilBonusissue : Nil

Privateplacement : NilIII. PositionofmobilizationandDeploymentoffunds(AmountinLakhs)

TotalLiabilities : 2436.43TotalAssets : 2436.43SourcesoffundsPaidupcapital : 1078.46Reserveandsurplus : NilSecuredloans : 820.00Unsecuredloans : 190.29

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DeferredTaxliability : NilApplicationofFundsNetfixedassets : 900.08Investments : NetCurrentassets : (190.63)DeferredTaxAsset : Misc.Expenditure :

Accumulatedlosses : 1379.30LakhsIV. PerformanceofthecompanyTurnover : Rs903.48Lakhs

TotalExpenditure : Rs.816.68LakhsProfitbeforetax : Rs.39.77LakhsProfitaftertax : Rs.39.31LakhsEarningspershare : Rs0.68Dividendrate : Nil

V. Genericnamesofthreeprincipleproducts.servicesofthecompany(aspermonetaryterms)ItemNo.(ITCcode) : ThecompanyisdoingconversionjobworkMajorproductDescription :

Asperourreportofevendate For andonbehalfoftheBoardForK.Ravi&Co.CharteredAccountantsS.SIVAM SUMANTHRAMAMURTHI DR.I.VANKATRAOPartner(M.No.207579) ManagingDirector Director

Coimbatore30thMay,2008

26

R.SRINIVASANCompanySecretary

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Nameof theMember FolioNo./ClientIDNo.

NameofProxy No.ofShar

KAKATIYATEXTILESLIMITEDRegd.Office:ELGITOWERS,737D,GreenFields,PuliakulamRoad,Coimbatore-641045

ElgiTowers,737D,GrenFields,PuliakulamRoad,Coimbatore-641045onWednesday,24thSeptember2008at11AM.

.......................................................................SignatureofMember/Proxy

Notes:1.Shareholder/ProxyholdermustbringtheAdmissionSliptothemeetingandhandoverat

theentrancedulysigned.2.Shareholdersarerequestedtoadvisetheirchangeofaddressaswellas

requestforconsolidationoffolio,ifany,totheaboveaddress,quotingfolionumbers.

KAKATIYATEXTILESLIMITEDRegd.Office:ELGITOWERS,737D,GreenFields,PuliakulamRoad,Coimbatore-641045

PROXYFORMI/We...............................................................................................................................................

of................................................................. beingaMember/MembersofKakatiyaTextiles

Ltd.,herebyappoint............................................................................................................of

..........................................orfailinghim.................................................................................

... of

........................................... asmy/ourProxytoattendandvoteforme/usonmy/ourbehalfatthe26thAnnualGeneralMeetingoftheCompanytobeheldonWednesday,24thSeptember2008at11AMandatanyadjournmentthereof.

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Signedthis....... dayof.......................................Affix

15paiseRevenue

Stamp

Notes

:

The

proxy

form

must

be

returned

so

as

to

reach

the

Registered

Office

of

theCompany,notlessthanforty-eighthoursbeforethetimeforholdingtheaforesaidmeeting.

BOOK-POST

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PRINTEDMATTERIfUndeliveredpleasereturnto:KakatiyaTextilesLimitedElgiTowers737-D,GreenFields,PuliakulamRoadCoimbatore-641045.