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1 WELSPUN COTTON YARN LIMITED 10 TH ANNUAL REPORT

2 1. Notice 2 2. s 1 Report 4 3. Auditors'Report 8 4. Balance Sheet Profit & Loss Account Schedules Balance Sheet Abstract Cash Flow 20

3 PUN COTTON YARN LIMITED (Formerly J. M. Patel Sales Pvt. Ltd.) COMPANY INFORMATION BOARD OF S BALKRISMAN GOENKA RAJESH MANDAWEWALA MURARILAL M1TTAL ATUL DESAI RAM GOPAL SHARMA RAJIVE KUMAR BHATNAGAR (OPERATIONS) MAHESH KHEMKA AUDITORS MGB & CO., CHARTERED ACCOUNTANTS BANKERS SUMITOMO MITSUI BANKING CORPORATION STATE BANK OF INDIA STATE BANK OF BIKANER & JAIPUR PUNJAB NATIONAL BANK CANARA BANK INDUSIND BANK LTD UTI BANK LTD REGISTERED OFFICE & FACTORY SURVEY NO. 76, VILLAGE & P.O. MORAI, VAPI, DIST. VALSAD, GUJA1W TEL : (0260) FAX : (0260) wttvapi.welspun@lwbbs.vapi.net B - TRADE WORLD; 9TH FLOOR, KAMALA MILLS COMPOUND, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI TEL TO 4 FAX : / welyarn@bom7.vsnl.net.in WEBSITE :

4 NOTICE is hereby given that the 10 th Annual General Meeting of Welspun Cotton Yarn Limited will be held at the Registered Office of the Company at Survey No. 76, Village Morai, Vapi, Dist. Valsad, Gujarat on Saturday, 11 th August, 2001 at noon to transact the following business: ORDINARY BUSINESS: 1} To receive, consider and adopt the Balance Sheet as at 31 s! March, 2001 and the Profit and Loss Account for the Financial Year ended 31 SI March, 2001 and the Report of s and Auditors thereon. SPECIAL BUSINESS : 2) To consider and,.if thought fit, to pass, with or a Special Resolution: "RESOLVED THAT pursuant to the provisions of section 224A of the Companies Act, 1956, M/s. MGB & Co., Chartered Accountants be and are hereby reappointed as the Auditors of the Company to hold office from the conclusion of this meeting to the conclusion of the next Annual General Meeting of the Company on a remuneration as may be agreed upon between the Board of s and M/s. MGB & Co.." 3) To consider and, if thought fit, to pass, with or 5) To consider and, if thought fit, to pass, with or "RESOLVED THAT Shri. M.L.Mittal whose term as an additional director expires on the conclusion of this meeting and for whom notice under Section Company be and is hereby appointed as of the Company, liable to retire by rotation." 6) To consider and, if thought fit, to pass, with or "RESOLVED THAT Shri. Atul Desai whose term as an additional director expires on the conclusion of this meeting and for whom notice under Section Company be and is hereby appointed as of the Company, liable to retire by rotation." 7) To consider and, if thought fit, to pass, with or "RESOLVED THAT Shri. R.G.Sharma whose term as an additional director expires on the conclusion of this meeting and for whom notice under Section Company be and is hereby appointed as of the Company, liable to retire by rotation." "RESOLVED THAT Shri. B.K.Goenka whose term as an additional director expires on the conclusion of this meeting and for whom notice under Section Company be and is hereby appointed as of the Company, not liable to retire by rotation." 4) To consider and, if thought fit, to pass, with or "RESOLVED THAT Shri. R.R.Mandawewala whose term as an additional director expires on the conclusion of this meeting and for whom notice under Section 257 has been received from a member of the Company be and is hereby appointed as of the Company, not liable to retire by rotation." 8) To consider and, if thought fit, to pass, with or "RESOLVED THAT pursuant to Section 269 read with Schedule XIII and such other applicable provisions, if any, of the Companies Act, 1956 (including any Statutory modification or reenactment's thereof for the time being in force ) consent of the members of the Company be and is hereby accorded for the appointment of Mr. R.K. Bhatnagar as - Operations of the Company for a period of 5 years w.e.f. 24 lh April, 2001 subject to be liable to retire by rotation provided however, Mr. R.K.Bhatnagar having opted to not draw any remuneration from the Company, shall not be entitled to draw any remuneration from the Company.

5 WELSPUN RESOLVED FURTHER THAT the Board of s be and is hereby authorised to do all such acts, deeds, matters and things as may be considered necessary, desirable or expedient for the purpose of giving effect to this resolution." Place : Mumbai Date : 19th June, 2001 NOTES By Order of the Board R.R. Mandawewala 1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT ONE OR MORE PROXIES TO ATTEND AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER OF THE COMPANY. Proxies, in order to be effective, should be duly stamped, completed, signed and deposited at the Registered Office of 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 Thursday, 19 th July, 2001 to Thursday, 26 th July, 2001 (both days inclusive). 3. Members are requested to immediately inform about their change of address or consolidation of folios, if any, to the Company's Share Transfer Agent. 4. All the correspondence pertaining to shareholding, transfer of shares, transmission etc. should be lodged at the Company's Share Transfer Agent M/s. Computech International Ltd., Shri Padmavati Bhavan, Plot No. 93, Road No. 16, MIDC, Andheri (E), Mumbai EXPLANATORY STATEMENT AS REQUIRED UNDER SECTION 173(2) OF THE COMPANIES ACT, ITEM NO. 2 Since more than 25% of the Company's share capital is held by Institutions/Banks/lnsurance Companies etc. as specified under section 224A of the Companies Act, 1956, the appointment/reappointment of Auditors require members' approval by a Special Resolution. Hence the resolution under this item is proposed for the approval of members as a special resolution. None of the directors of the Company is any way concerned or interested in the said resolution. ITEM NO. 3 to 7 The terms of appointment of Shri B.K.Goenka, Shri R.R.Mandawewala, Shri M.L. Mittal, Shri AtulDesai and Shri R.G.Sharma who had been appointed as Additional s under Section 260 of the Companies Act, 1956 expire on the conclusion of this meeting. Notices under Section 257of the Companies Act, 1956 has been received from a shareholder for their re-appointment as directors of the Company. Hence the resolutions at Item No. 3 to Item No. 7 are proposed for your approval. None of the directors except the director for whose appointment the resolution is proposed is any way concerned or interested in the respective resolutions. ITEM NO. 8 A Company having paid-up Share Capital of Rupees Five Crores or more is required to have a Managing/ Wholetime or Manager under Section 269 of the Companies Act, Mr. R.K. Bhatnagar is qualified as B.Text (Hons.) Gold Medallist from Technological Institute of Textiles, Bhiwani (Haryana). Mr. Bhatnagar has worked at very senior position in a number of well known companies in the field of textiles mainly Cotton Yarn and Cotton Products for nearly three decades. In view of this the Board is confident that the leadership of Mr. R.K. Bhatnagar shall contribute substantially to the growth of the company in the current market scenario and therefore recommended his appointment as (Operations). The proposed resolution at item No. 8 is under Section 269 read with Schedule XIII of the Companies Act, Relevant Notice u/s 257 have been received from a shareholder. None of the directors of the Company except Mr. R.K.Bhatnagar is any way concerned or interested in the said resolution. By Order of the Board Place : Mumbai Date : 19th June, 2001 R. R, Mandawewala

6 mal Reports Library Services - The Members, WELSPUN COTTON YARN LTD. Your s have pleasure in presenting the 10th Annual Report of Welspun Cotton Yarn Limited with the Audited Statement of Accounts for the year ended 31 st March, Financial Results : ^_^ DifcECTQRS' REPORT (R»- in Lacs) _ to $ Income from operations Profit before Interest, Depreciation & Tax Less : Interest/Finance Costs Gross Profit(Loss) (605.32) Less : Depreciation Profit/(Loss) for the year ( ) Less : Provisions for taxation - Add : Balance brought forward from previous Year (0.08) Loss carried forward ( ) During the financial year under report, your Company acquired the spinning division of Welspun India Ltd. w.e.f. from 1st April, 2000 by virtue of the High Court crtter dated 20th March, 2001 and therefore the financial statement of the financial year contained business operations of the sak) division for the first time, hence the figures are not comparable with that of previous year. In view of the losses, your s egress inability to recommend any dividend for the period under review. THE YEAR IN RETROSPECT During the year under report, the economic slowdown hit the industries across the board. In particular, the Cotton Yarn industry saw good market in the 1 s * half whereas the 2 W half came under the cloud of lower realisation. The situation aggravated by the shortage of good quaftty cotton due to failure of crop. Further, the devaluation of eurrandes of South Asian Countries, Turkey, Australia etc. vis-a-vte US dollar put downward pressure on the international prices of Cotton Yarn. Indian currency which was affected marginally by this devaluation, posed difficulties for Indian industry to sell its production except at only thin margin. Your company found Hsetf in trouble on the marketing front as well as production of quality yarn and consequently bdttomline bore the significant brunt. To overcome the problems laced in the past, your Company has evolved a strategy to better place itself in the current industrial and market scenario. As a part thereof, your Company has envisaged better value addition to Ring Spun Yarn with ac&ttionat combing machines which were installed in the test year. The value addition could surge to 80% in the financial year vis-a-vis 30% in the financial year The Combers were installed with concessional finance from IFCI under Central Government's Technology Upgmdetflon Fund (TUF), Secondly, me installation of Combers are expected to improve utiffealion of preparatory of tus unit to yteld better efficiency and economise costs. Thirdly, your Company has started production of specialised yarn to have niche for itself from the market and for growth in topttne with higher contribution to the bottomline. Realising the need to strengthen managerial efficiency, your Company has inducted executives at senior position to realise the values, the products deserve, and further improve its standing in the market. Your directors are pleased to forecast good cotton crop this season with the commencement of good m&naeon and hope to bring with it better business for the industry. ACQUISITION OF SPINNING DIVISION Pursuant to the alteration in the main Object Clause in the Memorandum of Association of the Company effected on 1st December, 2000, the Company had applied to the Hon'bte High Court of Gujarat for the approval of a Seheme u/s 391 and 394 of the Companies Act, 1966 for acquisition of the Spinning Division of Welspun India Limited. The Mon'ble High Court of Gujarat sanctioned the Scheme vide the Order dated 20 th March, 2001 and the same was fifed with the Registrar of Companies, Gujarat on 25 th April, Pursuant to the aforesaid order your Company allotted Equity Snares of Rs.107- each to the shareholders of Welspun India Limited. Further your Company allotted Preference Shares of the aggregate amount of Rs Lacs in respect of the Preference Shares of Welspun India Limited allocated to the Company in terms of the aforesaid Scheme. Your Company acquired the Spinning Drvisiton m aforesaid after revaluation of its assets as at 1st April, Besides, Welspun India Limited has agreed to discharge for and on behalf of your Company s&m# of the barm of Financial Institutions amounting to Rs Lacs atfd the Company has treated the same as Inter Corporate Deposits from Welspun India Limited. Earlier, your company had allotted 1755 equity shares of Rs. id/- each to defray the expenses of conversion of the Company Into a Public Limited Company, registration fees other expenses. CHANGE Or NAME AND CONVERSION tnto A PUBLIC LIMITED COMPANY in view of the change in the Object Clause of the Company, the name of the Company was changed from J.M Patel Sales Pvt Ltd to Welspun cotton torn Pvt. Ltd. ahd was also converted into a Public Limited Company viz. Welspun Cotton Yarn Limited in the month of January QUALITY STANDARDS AND INFORMATION TECHNOLOGY The Company has been keen on upgrading quality in all aspects of business to withstand the fierce competition in the kiternational market. To add further adge to fts competitive strength, the company has engaged services of leading technocrats to ensure quality control and made significant Investments Sn automations of key areas.

7 PUN Your company has successfully flagged the SAP-^RS implementation programme which ensures effective intra and inter departmental communication, eliminating impediment of distance and time, to faster dissemination of information and knowledge. IrvafttiKfon, all offices- factory and branches are inter-connected through a wide area network,with the latest technology. Your Company looks forward to develop e-commerce strategy to exploit opportunities in the world of internet. PUBLIC DEPOSITS The company does not have any Fixed Deposits from public within the meaning of section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposit) Rules, S During the year under report the changes in the Board of s were as under : - Mr. B.K. Goenka was appointed as an Additional w.e.f Mr. R.R.Mandawewala was appointed as an Additional w.e.f. 25, Mr. M.L.Mittal was appointed as an Additional w.e.f Mr. Atul Desai was appointed as an Additional W.e.f Mr. R.G. Sharma was appointed as an Additional w.e.f Mr. R.K Bhatnagar - (Operations) was appointed as an Additional Dierctor w.e.f Mr. D.K. Patil was appointed as an Additional on who ceased to be a on During the year under report the control of the Company was taken over by Mr. Goenka and Mr. Mandawewala and consequently the directors belonging to the persons having control prior to the said change over, resigned from the directorship. At the ensuing Annual General Meeting all the s who are continuing in the office on the date of the report shall cease to be s of the Company u/s 260 of the Companies Act, 1956 and the Board has recommended their appointment for members approval in the forthcoming Annual General Meeting. Relevant notices u/s 257 of the Companies Act, 1956 have been received. AUDITORS Your Company's Auditors M/s.MGB & Co., Chartered Accountants retire at the ensuring Annual General Meeting and being eligible, have given their consent to act as Auditors of the Company. Members are requested to consider their reappointment as the Auditors of the Company for the period commencing from the conclusion of the forthcoming Annual General Meeting to the conclusion of the next Annual General Meeting and to fix their remuneration by passing a special resolution u/s.224a of the Companies Act, AUDITORS' REPORT Notes on Accounts are self explanatory and do not call for any comment from the Board. THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF S) RULES, In terms of the above Rules, your s are pleased to give the particulars as prescribed therein in the Annexure which forms part of this Report. PARTICLUARS OF EMPLOYEES None of the employees is drawing remuneration in,excess of the limits prescribed under Companies Act, LISTING ON STOCK EXCHANGES Pursuant to the aforesaid High Court Order, the Company is entitled to list its equity shares on Ahmedabad (Regional), Mumbai, and Delhi Stock Exchanges. However as inform to the Company listing would be permitted only after the stock exchanges obtain SEBI clearance under Rule 19 (2) (b) of the Securities Contract (Regulations) Rules, The Company also intends to list its equity shares on National Stock Exchange so as to provide a better liquidity to the Investors all over the country. PERSONNEL Industrial relations at your company's plant remained cordial during the year under review. S' RESPONSIBILITY STATEMENT The s confirm that they had : a. followed in the preparation of annual accounts, the applicable accounting standards and given proper explanation relating to material departures, if any; b. selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; c. taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act so as to safeguard the assets of the company and to prevent and detect fraud and other irregularities; and d. prepared the accounts on a going concern basis. ACKNOWLEDGEMENTS Your directors place on record their appreciation of the support extended by Customers, Investors, Financial Institutions, Bankers, Business Associates, Vendors and various Government Agencies. Your directors would also like to place on record the contribution made by the employees at all levels. Place Date R.R. MANDAWEWALA Mumbai 19th June, For and on behalf of the Board M.L. MITTAL