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Notes to Accounts of Crew B.O.S Products Ltd.

Mar 31, 2013

1. The Company got to know about the fraudulent transactions entered into Merchant Trading as was highlighted by legal notices received from Standard Bank Mauritius Limited, Mauritius and Bank One Limited, Mauritius. After finding the same, Company formed an internal investigating committee to go into the detail and come out with the appropriate impact on the account. Based on the committee findings ex- CFO cum Director International Sales and CEO Leather Division - Mr. Sanjeev Sehgal was terminated as he was solely responsible for the International Trade transactions. Company has lodged complaint against him which is pending with the appropriate authority. Accordingly legal notices were also sent to the buyers in Dubai relating to Merchant Trade transactions. Based on the findings of the initial report of the committee the following adjustment/provision have been made in the books of accounts.

a. Company has accounted for export sales of '' 4,938.74 lacs in the first three quarters of the financial year on the basis of the certified copy of invoices and cargo receipt received from the ex- CFO Mr. Sanjeev Sehgal. However these sales were reversed in the last quarter based on the findings by the internal investigating committee that there were no proper documents, records to substantiate these transactions reflected as sales in earlier quarters.

b. The Company has made provision to write back the all the creditors related to International Merchant Trade amounting to '' 3,111.16 lacs

c. The Company has made provision for bad and doubtful debts for all the debtors related to International Merchant Trade amounting to '' 11,180.08 lacs.

d. The Company has made an ad-hoc provision for bad and doubtful debts for debtors related to domestic trading amounting to '' 3500 lacs. The net receivables related to domestic trading after making above provision are '' 10825.97 lacs at the year end.

e. The Company has debited '' 68.64 lacs to the accounts of Mr. Sanjeev Sehgal in regard to the advance payment made by him from the company''s bank account to various parties which seems to made by him for his personal affairs.

The investigation is still on and it may come out with Further findings later on, which will be dealt with in the books when final committee report is received and substantiated by documents.

2. Management of the Company is of the opinion that going concern principle followed in preparation of financial statement hold good, as it believes that the realizable value of assets is much above its book value. which is sufficient to discharge its liability (known and unknown) The Company is confident to revive with new business plan and strategies when supported by the financial institutions/lenders.

3. The various parties balances (debit/credit) outstanding are subject to confirmation. The Company has sent letter to certain parties for confirmation of statement of account/balances for the year. The Company has not received confirmed statement/balance confirmation from those parties except in few cases. The variation if any found upon reconciliation may affect the financial statement to that extent.

4. Contingent liabilities in the respect of:

(Rs.in Lacs)

For the year ended For the year ended 31st March, 2013 31st March, 2012

a) Guarantees given by Bankers 3.63

b) Capital Commitments (Net of Advance) 198.76 806.01

c) Bonds given to Excise authorities for its Export Oriented Unit(s) (Total amount of Bond-'' 800.00 Lakhs) 712.40 711.41

d) Bonds/LUT given to custom authority against EPCG Licences 843.07 1855.26

e) Letter of Credit established by bank 934.11 1509.85

f) The Company has given Corporate Guarantee to the bankers of its following wholly owned subsidiaries for credit facility availed by them

I.Biz Trade Post, Mauritius : USD 23 Million (Which has been invoked by the Standard Bank

Mauritius Limited, Mauritius due to default in repayment of loan by its WOS)

Alchemy Trade Post, Mauritius : USD 10 Million to Mauritius Commercial Bank, Mauritius

i. Connect Trade Post, Mauritius : GBP 5 Million (Which has been invoked by the Bank One Limited, Mauritius due to default in repayment of loan by its WOS) Vogue Home Products Limited : INR 300 Lacs to Yes Bank Limited Crew PPO Leathers Limited : INR 1000 Lacs to Yes Bank Limited

g) Claims made by four employees are pending in the Industrial Tribunals/High Court. Any liability which may arise out of awards from Tribunal is Contingent and shall be account for in the year of settlement of case. These cases are still running in Courts as confirmed by the Management.

h) Effects of Exchange Difference on Derivative transactions shall be accounted for at the time of cancellation and/or maturity of the Foreign Exchange hedging contract. Pending derivatives contracts as on 31.03.2013 are USD 0.30 Million.

i) The Company has outstanding Export obligation of '' Nil (Previous Year Nil) under EPCG Licenses obtained for Import of Capital Goods. The redemption of EPCG licenses having Export Obligation completed aggregating to '' 3021.79 Lakhs is under process with DGFT.

j) No provision has been made for the possible liability arising out of pending legal cases. Detail of pending legal case is as per note no. 34.

k) The Company has received short payment of '' 124.78 lacs against Claims and Rejections and Rebate and Discount of the buyers for export made to them. The Company has debited under the head "Rebate and Discounts". The Company has not refunded the Duty Draw Back on the above claims to the Govt. Authority and the same is contingent liability in case the same is asked by the department to refund the excess amount of Duty Draw Back received.

l) Company has not made provision for the disputed income tax demand as mentioned in note no 30 as matter is pending under appeal.

5. The company has served a legal notice upon Zeta Leather Exports u/s 138 of Negotiable Instrument Act for dishonour of cheques aggregating to '' 4.0 lacs. The total outstanding of the above mentioned firm is '' 10.10 lacs at the yearend as per books of account of the Company. The company has not made provision for Bad Debts for this amount since the Company is hopeful for recovery after filling of legal case against the party.

6. Earning Per Share (E.P.S)

The basic/diluted earning per share calculated as per Accounting Standard- 20 issued by The Institute of Chartered Accountants of India is as under:

7 As notified by the Ministry of Corporate Affairs of the Government of India revised schedule VI under the Companies Act, 1956 is applicable to all financial statements for the financial year commencing on or after 1st April, 2011. Accordingly, the Financial Statement for the year ended 31st March, 2013 are prepared in accordance with the aforesaid Revised Schedule VI

8 Figures pertaining to the previous year have been rearranged, regrouped, reclassified and restated, wherever necessary to make them comparable with those of current year.


Mar 31, 2012

A) The holders of the Equity shares are entitled to receive dividends as declared from time to time, and are entitled to voting rights proportionate to their share holding at the meetings of shareholders.

b) The Company has not issued shares for a consideration other than cash or bonus shares during the immediately preceding 5 years.

c) Forfeiture share warrant note

In the Financial year 2009-10 the Company had issued 20 Lacs warrants convertible into equity shares of the Company on Preferential Basis at a price of Rs. 50.33/- per warrants, which will entitle the holder to subscribe to one equity share of the face value of Rs. 10/- at a price not being less than Rs. 50.33/- (including premium of Rs. 40.33/-) per equity share of the Company against each warrant and have an option to apply for and be allotted one equity share of the Company per warrant at any time after the date of allotment but on or before the expiry of 18 months from the date of allotment, in one or more tranches. In Financial Year 2010-11 only one warrant holder exercised his option and converted his 75,000 warrants into equity shares. In current Financial Year 2011-12 Six warrant holders holding 11,00,267 warrants (which include 73172 warrants exercised by one Holder i.e. Fable Concept & Technology (P) Ltd. out of 258172 warrants) has been exercised his option and convert his warrant into equity shares. Those warrant holders who did not exercise option and not converted his warrant into equity shares within a period of 18 months from the date of allotment, the 25% amount paid being Rs. 103.77 Lacs by the warrant holders at the time of allotment has been forfeited under Clause 77 of Chapter VII of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. The forfeited amount of Rs. 103.77 lacs has been shown under the head- "Extra-ordinary Items" in the Statement of Profit and Loss.

The total term loan outstanding at the year end amounts to Rs. 5,263.30.Lacs Out of these a sum of Rs. 2,297.69 being due after 31.03.2013 have been shown under "Long-Term Borrowing and the Installments falling due in respect of all the above Loans upto 31.03.2013 amounting to Rs. 2,965.61 Lakhs have been grouped under "Current maturities of long-term debt" (Refer Note 9)

a. During the financial year 2006-07, the Company was sanctioned the External Commercial Borrowings (ECB) loan consisting of Japanese Yen equivalent of USD 5,000,000 for capital expenditure requirements vide credit arrangement entered with Citi Bank N.A. London. The ECB loan amount had been revised to USD 4,000,000 and accordingly fully utilized by the Company. During the year the company has repaid ECB Loan by USD 5,69,894 equaling to INR 429.87 lakhs). The interest rate on ECB loan is JPY Libor plus based. Outstanding Balance of ECB at the last day of financial year 2011-12 equals to INR 338.34 Lakhs including interest of Rs. 17.64 Lacs. The aforesaid ECB loan was scheduled to be repaid by 31st March, 2012, but Company has filed re-schedulement request with Citi Bank NA, London to repay the remaining balance in installments by 31st October, 2012.

b. The Company has borrowed short term loans from IFCI Factors Limited, IFCI Venture Capital Funds Limited, Karvy Financials Services Limited and Pinkhem Investment Company Pvt. Ltd against the pledge of shares of the Company held by promoters and promoters group Companies. 3161996 shares has been sold by the aforesaid Companies due to fall in the share price and value of collateral margin as per terms and condition of sanction letter and the amount recovered on such sale has been adjusted by them against loan amount due from the company. The company has given credit to the account of promoters & their group companies respectively by the amount which has been recovered by the above companies against sale of pledged shares and are shown under the head- "Unsecured Loans from related parties".

c. The outstanding loan amount of Rs. 77.65 Lakhs due to S.E Investments Ltd has been squared up during the year against security deposits of Rs 76.00 Lakhs & the balance amount of Rs. 1.65 Lakh has been accounted for as the interest income for the year. The confirmation from the party for above transaction is not available.

a) The Company has a Group Gratuity Policy with LIC of India. The company discontinued to make payments to them for last more than couple of years. Therefore, LIC of India could not provide details of due payments to regularise the said policy andd to make balance provision of gratuity. In such circumstances, the company has made a provision of Rs. 35 lacs (Previous Year Rs. 163.92 lacs for Gratuity for the current Financial Year and no acturial valuation is available to support this provision.

Notes:

a. Working Capital Loans from banks are secured against hypothecation of present and future moveable assets of the Company. These Loans are further secured by collateral security of immoveable properties of the Company and personal guarantee by Promoter Directors and by Corporate Guarantee of the Associate Companies namely Fable Concept & Technology P Limited and Elan Trade Post P Limited. Further Axis Bank has exclusive charge on property at Manesar belonging to WOS of the Company namely Vogue Home Products Limited.

b. The Company has taken interest free unsecured loan from below mentioned parties, the terms & condition of the loans are not in writing and however the same are repayable on demand as confirmed by the management. Accordingly Company has classified these loans under the head Short Term Borrowing.

c. The Company has received Rs. 70 Lacs from Raghav Aditya Chits Private Ltd by redeeming chits. The Company has been paying monthly chits of Rs. 3 lacs each. As confirmed by the company it will account for profit/loss on this account at the close/completition of the chits hence no profit/loss on redemption of chits has been booked in the current financial year The outstanding amount as on 31st March, 2012 is Rs. 34.00 Lacs, confirmation from the party is still awaited.

d. The Company has received legal notices from two banks, namely SIDBI and DBS Bank Ltd. u/s 138 of Negotiable Instrument Act for dishonor of cheques amounting to Rs. 511.34 Lacs and Rs. 1352.64 Lacs respectively. The Company had issued these cheques as security cheques for the vendor bill discounting facility from SIDBI and LC/Buyers Credit facility from DBS Bank. Both SIDBI and DBS bank have filed legal cases against the Company and are running in the District Courts. However the Company has paid some amount against the above liability and the outstanding balance as at 31st March, 2012 is Rs. 112.71 Lacs and Rs.1272.23 Lacs with SIDBI and DBS Bank respectively.

e. During the year, the company has taken Short-term loan of Rs. 200 Lakhs from M/S Matrix Clothing Pvt Ltd in which one of the directors of the company is interested. The said loan has been repaid with interest during the year.

a. The Company has sent letters to vendors to identify their status of registration as Micro, Small & Medium Enterprises Development Act, 2006. The Company has received reply from few vendors and has provided interest of Rs. 10.57 Lakhs (previous year Rs.8.60 lacs) on delayed payment to parties as identified by the management. The Company has not paid interest amount to any party and the total outstanding amount of interest is Rs. 23.31 lacs at the year end.

a. The Company has provided bonus of Rs 64.49 Lakh (previous year Rs 115.83 Lakh) for the year at minimum rate of bonus as prescribed in Bonus Act. The company has not made calculation of allocable surplus as per Bonus Act despite having profits to determine the rate at which bonus should have been paid subject to maximum rate of 20% of wages & salary. The variation amount in provision made for bonus to actual calculation of bonus as per provisions of Bonus Act is contingent and unascertained. Had it been at maximum @ 20% then the amount would have been Rs. 154.84 Lakhs and the profit would have been reduced by this amount.

a. Capital advances / WIP include Rs 3113.62 Lakhs (Previous year Rs 3572.05 Lakh) on account of building under construction at Neemrana (Raj.).

b. Depreciation on factory building includes Rs 62.28 Lakh (Previous year 62.28 Lakh) being the amount of amortization on lease hold property over the lease period.

c. The Company has amortized Rs. 12.97 lakhs being one-tenth (previous Year Rs 12.97 lakhs) of total Rs 129.70 lakhs on development of new recipes and formulation for its leather finishing unit at Manesar being incurred in Financial Year 2005 - 06.

d. The company has capitalized following amount under the respective heads during the year under reference which were being shown under head Capital work in progress till previous year

a. The Company has invested Rs. 1486.05 Lacs (equivalent USD 3 Million) and Rs. 5.00 Lacs (equivalent USD 10001) in its two wholly owned subsidiaries in Mauritius during the year under reference namely i.biz Trade Post and Alchemy Trade Post respectively. The audited accounts of these Companies since incorporation up to the end of the financial year have been incorporated in consolidated financial statement.

b. i) The Company has sold its entire holding of 1000 equity share of its wholly owned subsidiary Crew BOS Far East Limited, Hong

Kong during the year under reference at US$ 1200 (equivalent INR. 58571/-). The profit on sale of investment is Rs. 15,321/- has been taken as income in the Profit and Loss Account. Since the Company has disinvested 100% shareholding of the Company the loan due from WOS amounting to Rs. 27.06 Lacs has been written off.

ii) The Bankers have been informed for disinvestment of 999 shares of Crew BOS Far East Limited, Hong Kong sold to Everest Dunes Trading LLC, Dubai. One share has been sold to one of the employee of the Company, which is still to be reported to the bank.

c. The Company has sold its entire holding of 100000 equity shares of its wholly owned subsidiary Villa BOS Leathers Limited during the year under reference at book value of Rs. 10/- each amounting to Rs. 10 Lacs. These shares were sold to one of the director and employees of the Company.

d. The Company has invested Rs. 5.0 Lakhs in its wholly owned subsidiary Crew PPO Leathers Limited during the year under reference against purchase of 50000 equity share of Rs. 10 each.

e. The Company has invested Rs. 24.00 Lacs in its associate company Tempesta Luxury Products Private Limited during the year under reference against purchase of 240000 equity shares of Rs. 10 each at par.

a. There is one bank account with SBI Mumbai ( A/c No:-11147725327) which is in the name of Crew B.O.S Products Pvt Ltd. The balance as on 31-03-2012 is Rs 1,02,062.00 as per the balance confirmation certificate issued by the bank. The Company has confirmed that this account belongs to the company, however the company has not yet informed to the bank regarding change of name of the company.

b. The company has opened a new bank account with HDFC Bank (A/c no:- 06162320000717) by depositing Rs.10,000 during the year. The company has neither received the bank statement nor balance confirmation certificate for balance lying as on 31-03-2012. During the year there are no other transactions in the said account as per the books of account.

c. There is a difference of Rs 26590/- in the balance of bank account - SBI Nangal Dairy (A/c No.-10141910389) as per books and the bank statement. This difference is on account of being a cheque of Rs 26590/- received from a party which could not be deposited as the same was misplaced. The company is following up with the party for issue of duplicate cheque and this amount is being shown in the bank reconciliation.

a. The Company had invested in its wholly owned subsidiaries and joint venture companies from time to time. Some of these companies are still operational and sum of these companies have stopped operations with negative net worth. Therefore, amount invested in those non-functional companies are non recoverable/receivable including any share capital , loans given to them. Such non functional companies investment and advance are as:- Crew MAG Exports Limited Rs. 1460.44 lacs, Crew ROR Products Limited Rs. 659.41 lacs and Centre of Excellence in Design Limited Rs. 304.85 lacs. Since the settlement process with these companies are still in progress hence the company has not made any provision for these outstanding receivable.

b. The Company has sold machinery worth Rs. 1.34 lacs to Crew BOS Society in which two directors of the company are interested a Member of the Society. The outstanding amount recoverable from the Society as on 31st March, 2012 is Rs 436.51 Lakhs (Previous Year Rs 55.47 Lakh).

c. The company had given a sum of Rs. 12.5 Lakhs to M/S Garv Marketing as advance for construction, supplying and commissionin 200 M3/day cap. Thermax Sewage Treatment Plant including electrical, mechanical & civil work at factory complex on plot no. SPL 190 RIICO Neemrana Phase - II. The plant work is yet to be completed. This amount was given in the FY 2008-09 and the company has no made any provision in the books for this amount. The confirmation from this party is also not available.

d. The company had given a sum of Rs. 30.00 Lakhs in FY 2009-10 to M/S Gopi Engg & Sons as advance against purchase o machineries. The said machines have not yet been delivered by the party. The company has not made any provision in the books fo this amount. The confirmation from this party is also not available.

e. HSIDC Ltd. had allotted plot measuring 9000 sq.mtrs at IMT Manesar. The company had given an advance of Rs. 202.75 Lakh (Previous year-Rs. 202.75 Lakhs) to HSIDC Ltd. being 25% of the total value of Rs. 810.00 Lakhs. The Company has not yet got the possession of the plot, since the installments as per allotment letter are yet to be paid. As per Re-allotment Letter dated 14th Dec, 200 the company should have paid a sum of Rs. 412. 32 Lacs (including interest of Rs. 108.57 lacs not provided for in the books) beside initial payment of Rs. 202.75 lacs by 31/03/2012 which has not been paid and is overdue for payment. The HSIDC may cancel th allotment / forfeit the plot allotment in case the company makes the default in payment due

f. During the previous year Company had entered into an agreement for sale of its factory building located at Plot No. 172, Udyog Vihar Phase I, Gurgaon (Haryana) for total consideration of Rs. 650 Lakhs. The Company had received advance aggregating to Rs. 60 Lakh inthe previous year. The said agreement has been cancelled during the current year since the required permission from its banker fo vacation of mortgage/charge on the said property could not be obtained and advance received has been refunded back to the party without interest thereon

a. Export Sales includes Rs 12.48 Lacs being profit (Previous Year 22.09 Lakh profit) from exchange difference on realization of foreign currency.

b. The Company has sold cotton fabrics to its Mauritius WOS i.biz Trade Post worth Rs.788.00 lacs, the same has been delivered in India to its associate company Villa BOS Leathers Limited against further sale thereof by WOS to Villa BOS Leathers Limited.

c. The company has purchased fabric worth Rs.7460.65 lacs from various parties and sold the said fabric worth Rs. 9291.47 lacs tovarious parties. The confirmations from these parties have not been received.

a. There are credit balance of Sundry Creditors amounting to Rs 3.23 Lakhs being which have not been claimed for more than threeyears by the suppliers are unconfirmed and the company has accounted for as income during the year under reference as perAccounting Policy followed by the company.

a. The Foreign Exchange Loss includes Rs 298.89 Lakhs (Previous year Rs. 301.79 Lakhs) being loss from Forward booking/Derivative transactions for the year and has been accounted for as expense for the year under reference.

b. The Company has accounted for purchases of Rs. 120.02 lacs during the year against bills pertaining to earlier years of various parties upon reconciliation of their account. Which includes Rs. 71.50 Lacs being spare parts purchased from Trigon Marketing and Rs. 41.34 lacs being fabric purchased from Global Marketing and Resources INC. The Company has transferred these purchases under the head prior period expenses since goods were received and consumed in earlier years. These parties are regular and discrepancies were noticed and reconcile based on reconciliation of accounts with them.

c. The Company has received short payment of Rs. 67.74 lacs against claims and rejections of the buyers for export made to them. The Company has debited Rs. 33.78 lacs under the head "Rebate and Discounts and remaining amount of Rs. 33.96 lacs has been debited under the head "Foreign Exchange Fluctuation". The Company has not refunded the Duty Draw Back on the above claims to the Govt. Authority and the same is contingent liability in case the same is asked by the department to refund the excess amount of Duty Draw Back received.

d. The company has paid a sum of Rs. 8.78 Lakhs(US $ 21650) towards incorporation of a new company named Crew B.O.S Products (INT) Pte Ltd, Singapore. The company has debited this expenditure under the head Professional Charges. However this is not a business expenditure of the Company and this payment has resulted in increase in profit of the company by this amount.

e. The company has purchased Vastu Yantra for Rs 8.18 Lakhs and also paid vastu consultancy fee of Rs 2.21 Lakhs in relation thereto

& these expenses have been accounted for under the head Professional charges instead of capitalizing the same hence resulting in increase in profit by Rs. 10.38 lacs

f. There are domestic debtors from whom Rs 18.41 Lakh is due to be recovered for over more than three years. These debtors are unconfirmed and doubtful and same has been written off as Bad Debts during the year under reference as per Accounting Policy followed by the company.

(Rs. in Lacs)

For the For the year ended year ended March March 31, 2012 31, 2011

1. Contingent liabilities in the respect of:

a) Guarantees given by Bankers - 3.00

b) Capital Commitments (Net of Advance) 806.01 1529.39

c) Bonds given to Excise authorities for its Export Oriented Unit(s)

(Total amount of Bond-Rs. 800.00 Lakhs) 711.41 635.43

d) Bonds/LUT given to custom authority against EPCG Licences 1855.26 1855.26

e) Letter of Credit established by bank 1509.85 4564.77

f) The Company has given Corporate Guarantee to the bankers of its following wholly owned subsidiaries for credit facility availed by them

I.Biz Trade Post, Mauritius USD 15 Million [Equivalent to INR 7673.48 Lacs]

Alchemy Trade Post, Mauritius USD 10 Million [Equivalent to INR

5115.65 Lacs]

Vogue Home Products Limited iNR 300 Lacs

Crew PPO Leathers Limited inR 300 Lacs

g) Claims made by four employees are pending in the Industrial Tribunals/High Court. Any liability which may arise out of awards from Tribunal is Contingent and shall be account for in the year of settlement of case. These cases are still running in Courts as confirmed by the Management.

h) Effects of Exchange Difference on Derivative transactions shall be accounted for at the time of cancellation and/or maturity of the Foreign Exchange hedging contract. Pending derivatives contracts as on 31.03.2012 are USD 8.58 Million (Equivalent INR 4389,23 Lacs) and GBP 0.6 Million (Equivalent INR 490.80 Lacs)

i) The Company has outstanding Export obligation of Rs. Nil (Previous Year 58.15 Lakhs) under EPCG Licenses obtained for Import of Capital Goods. The redemption of EPCG licenses having Export Obligation completed aggregating to Rs.16166.28 Lakhs is under process with DGFT.

j) There was a Tax Survey on the company on April 12th, 2010.The proceeding are on and final report of Survey team have not yet been finalized as confirmed by the Management. Therefore tax impact due to survey is not quantifiable and remains un- provided and will be dealt with in the year when the same is finalized.

2. The various parties balances including merchant trade outstanding are subject to confirmation. The Company has sent letter to certain parties for confirmation of statement of account/balances for the year. The Company has not received confirmed statement/ balance confirmation from those parties except in few cases. Wherever statement received and there were deviation it has been reconciled to accounts as per documents available and others not received are subject to reconciliation and in case of variance upon reconciliation this may affect the profitability to that extent.

3. The company has served a legal notice upon Zeta Leather Exports u/s 138 of Negotiable Instrument Act for dishonour of cheques aggregating to Rs. 4.0 lacs. The total outstanding of the above mentioned firm is Rs. 10.10 lacs at the yearend as per books of account of the Company. The company has not made provision for Bad Debts for this amount since the Company is hopeful for recovery after filling of legal case against the party.

4. The Company received import license for duty credit amount of Rs. 166.50 Lacs during the year out of which Company has utilized duty credit of Rs. 60.14 lacs during the year against import of capital goods and unutilized balance at the year end is Rs. 106.36 Lacs. The Company has also received Status Holder Incentive Scripts for duty credit of Rs. 177.83 Lacs during the year, which is unutilized at the year end.

5. The Company has been using Tata Ex software for their accounting. The Company has confirmed that software is no more supported by vendor being old software. Accounts have been compiled based on trial balance print out from software. The Company acknowledges that different reports from different inputs from the software do not reconcile with each other. The Company is planning to purchase new software for accounting to overcome the error reports in the existing software.

6. The physical stock at the yearend has been taken and valued as certified by Management. The discrepancies found upon physical verification on test basis compared to the system generated data from the software is due to the error in report generation as mentioned in para 31 above and are under reconciliation for necessary rectification.

7. a) The Company continues to do international merchant trade in Dubai. Now with the opening of WOS in Mauritius this trading

stands shifted to Mauritius. The Company sold goods worth Rs. 47052.50 lacs during the year which includes goods worth Rs. 35634.93 lacs returned back due to quality issue and resold to different vendors in Dubai itself. The aggregate receivable from these vendors amounts to Rs. 22771.90 lacs. RBi compliances if applicable as regard resale of such material are pending.

b) During the year the Company has purchase goods worth Rs. 41365.34 lacs out of which goods worth Rs, 31356.83 lacs were returned to the supplier due to quality issue. The outstanding at the year end is Rs. 19008.79 lacs payable to the supplier.

c) No provision has been made in respect of overdue debts related to International Trading and Domestic Trading. Management has confirmed this to be good and realizable.

The Company has paid director remuneration in excess of limit prescribed under schedule XIII of the Companies Act by Rs. 59.45 lacs. The Company is applying for waiver of excess managerial remuneration paid by filling an application with the Central Government. In case the approval for waiver of excess remuneration paid is not received from the Central Government, the directors will refund to the Company the above excess amount received by them.

8. As notified by the Ministry of Corporate Affairs of the Government of India revised schedule VI under the Companies Act, 1956 is applicable to all financial statements for the financial year commencing on or after 1st April, 2011. Accordingly, the Financial Statement for the year ended 31st March, 2012 are prepared in accordance with the aforesaid Revised Schedule VI

9. Figures pertaining to the previous year have been rearranged, regrouped, reclassified and restated, wherever necessary to make them comparable with those of current year.

 
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