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Notes to Accounts of DCM Financial Services Ltd.

Mar 31, 2015

1. CONTINGENT LIABILITIES & OTHER COMMITMENTS

(a) Claims lodged and contingent liability arising out of suits and winding up petitions filed against the company not acknowledged as debts amounts to Rs.826.38 Lacs. There are also other cases filed in consumer, civil & criminal courts and other courts against the company for which the company is contingently liable but for which the amount is not quantifiable.

(b) Punjab & Sind bank has filed a recovery suit before the Debt Recovery Tribunal (DRT) for recovery of Rs.1,217.52 Lacs against which the amount payable to them, as per books is Rs.803.40 Lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs.414.12 Lacs has been made. In the event of default in the payment of interest and principal or default as per Fresh Restructuring Scheme or Fresh Restructuring Scheme is rejected, the concessions made by PSB shall stand withdrawn and their claim settled before the Debt Recovery Tribunal of Rs.1,217.52 Lacs will become payable with immediate effect.

(c) IndusInd Bank has filed a recovery suit before the Debt Recovery Tribunal (DRT), of Rs.1,042.42 Lacs against which the amount payable to them as per books is Rs.577.00 Lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs.465.42 Lacs has been made. In the event that the company fails to pay the interest or principal or company default as per Fresh Restructuring Scheme or Fresh Restructuring Scheme is rejected, the concessions made by Indusind Bank will be withdrawn and the amount claimed in the Debt Recovery Tribunal amounting to Rs.1042.42 Lacs would be payable with immediate effect.

(d) During the year 1999, the company had received Rs.100.00 Lacs from one of its debtors i.e. Pure Drinks New Delhi Ltd. and reduced the same amount from his recoverable balance. Subsequently the Hon'ble Punjab and Haryana Court deemed that payment is an out of turn payment and asked the company to deposit back the said amount. The company had filed a SLP with the Hon'ble Supreme Court of India which has been dismissed by them. Therefore the company is liable to deposit the amount mentioned above which has yet to be deposited. And in view of restrictions imposed on operations of Bank A/c's by Hon'ble Delhi High Court, the company has filed an application to release this money for depositing the same with Punjab & Haryana High Court.

(e) During the year ended 30th June, 2011 the company's tenant has filed a claim of Rs.100.00 Lacs against the company due to damages suffered by the tenant which is pending under arbitration proceedings as on 31st March, 2015.

(f) There is a demand of Rs.141.75 Lacs raised by Income Tax Department for the Assessment Year 2010-11 for payment of income tax under the Income Tax Act, 1961, which is disputed by the company as brought forward losses under the Income Tax Act has not been allowed by the department and rectification application for deletion of above said demand has been filed by the company which is pending before the appropriate authorities.

(g) There is an award passed by the arbitrator against the company in the matter of MS Shoes East Limited on May 28, 2012 for Rs.51.28 Lacs i.e. claim amount along with interest of Rs.307.00 Lacs for an underwriting given by the company in the year 1995 for the public issue of M/s MS Shoes East Ltd. The same has been contested by Company before Hon'ble Delhi High Court.

(h) Due to dispute with the builder M/s NBCC Ltd. from which the company had purchased an office premises in the year 1995, regarding a claim for Rs.283.00 Lacs on account of increase in super area and certain other expenditure M/s NBCC Ltd. had incurred and the same is pending in arbitration.

2. RESTRUCTURING SCHEME

The management for a structured debt repayment had prepared two schemes of arrangement for reorganization of share capital of the company and for compromise with its secured and unsecured creditors. Both the schemes of arrangement envisage a viable, just & equitable settlement with its secured and unsecured creditors while simultaneously increasing the risk and stake of the promoters and their shareholding through fresh infusion of funds by the promoter company.

The company has also moved an application before the Hon'ble Company Law Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations, 1991 proposing a fresh repayment schedule to fixed depositors of the Company. The same repayment schedule has been included in the "Fresh Restructuring Scheme" filed before the Hon'ble High Court of Delhi at New Delhi on 24th September 2004.

The implementation of the schemes is subject to the fulfillment of all the conditions of section 391 to section 394 of the Companies Act, 1956 and approval/orders of the Hon'ble Delhi High Court. The Hon'ble Delhi High Court did not approve the company's first scheme filed in May 2000, though approved by the secured and unsecured creditors in their respective meetings convened pursuant to the orders of the Hon'ble Court, yet the Hon'ble Court did not accord sanction to the scheme on technical grounds. An application for review had been filed before the Hon'ble Delhi High Court on 30th May 2003, which is yet to be listed for hearing and which is hereinafter, wherever applicable, referred to as the "old scheme under review". The company intends not to pursue the review application filed for the old scheme under review before the Hon'ble Delhi High Court and it is proposed to be withdrawn at an appropriate stage of the proceedings for the sanction of the "Fresh Restructuring Scheme".

The company has filed a fresh Scheme of Arrangement for the reorganization of the share capital of the company and for compromise with the secured and unsecured creditors of the company, hereinafter referred to as the "Fresh Restructuring Scheme" before the Hon'ble Delhi High Court at New Delhi on 24th September 2004.

Pursuant to the orders of the Hon'ble Delhi High Court, the unsecured creditors and debenture holders in their meeting convened under the Chairpersonship of court appointed Chairpersons (retired Judges of Hon'ble Delhi High Court) on 1st April 2005 and 2nd April, 2005 have approved the scheme without any modifications with the requisite majority. The meeting of the other secured creditors (banks/ institutions) was held on 17th September 2005 and has also approved the scheme by the requisite majority after considering some modifications proposed by the Punjab & Sind Bank.

The promoter company has undertaken, subject to sanction of the scheme by the Hon'ble Delhi High Court, to contribute to Rs.195,000,000 of which Rs.156,000,000 were deposited with the Registrar of the Hon'ble Delhi High Court Registrar, as per court order by the promoter group, and the balance amount of Rs.39,000,000 has been deposited on 27th April, 2012.

The fresh restructuring scheme is conditional upon the following approvals and shall be deemed to be effective on obtaining the last of the approvals and the occurrence of the last of the following events: -

i. Sanction of the scheme by the Hon'ble High Court of Delhi under Sections 391 and 394 of the Companies Act, 1956 and other applicable provisions of the Act, Rules and Regulations, as the case may be;

ii. Filing of certified copies of the order of the Hon'ble High Court of Delhi with the Registrar of Companies (Delhi and Haryana).

The restructured debts of the company for each category of debt is on the basis of outstanding as envisaged in the fresh restructuring scheme filed in the year 2004 excluding interest not provided for and all liquidated damages/penal charges and interest on unpaid interest. The "Fresh Scheme of Arrangement" is drawn on the basis of acceptance of waiver of payment of past and future interest, penal charges, liquidated damages, and any other charges, costs and claims etc. except as provided and for values contained therein which is subject to the approval of the Hon'ble Delhi High Court.

The accounts of the company have been drawn on the assumption that the "fresh restructuring scheme" will be accepted and implemented. If it is not accepted and cannot be implemented for any reason the total liability before the proposed restructuring scheme including those for which no provision has been made and has been quantified under appropriate heads, shall become payable.

The fresh restructuring scheme is pending before the Hon'ble Delhi High Court as at 31st March, 2015 & there is no change in the status at the time of signing of the financials for the period ended 31st March, 2015 by the Board of Directors.

3. Deposit of Rs.1,950.00 Lacs by DCM Services Limited

DCM Services Ltd as a promoter has committed to bring in Rs.1,950.00 Lacs as a promoter contribution upon sanction of their restructuring scheme u/s 391 of the Indian Companies Act, 1956 which is presently pending for sanction before the Hon'ble Delhi High Court.

The Court vide order dated 06.05.2008 has asked DCM Services Limited to deposit Rs.1,950.00 Lacs with the Court and pursuant to the court order, They have deposited Rs.500.00 Lacs on 16.07.2010, Rs.670.00 Lacs on 18.11.2010, Rs.390.00 Lacs on 21.04.2011 & Rs.390.00 Lacs on 27.04.2012 aggregating to Rs.1,950.00 Lacs on behalf of the promoters with the Registrar, Hon'ble Delhi High Court. No financial impact of this has been recorded in the financials of the company for the period ended 31st March, 2015.

4. INCOME TAX

(a) Deferred Tax Assets

In accordance with Accounting Standard-22 as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014, deferred tax assets on accumulated depreciation and losses have not been accounted for since as per certain operational restrictions imposed, the company is unable to conduct any new business and therefore it is uncertain whether there will be sufficient future taxable income against which such deferred tax assets can be realized. Accordingly in view of absence of virtual certainty of sufficient taxable income in future no provision for deferred tax has been made.

(b) Tax Provision

The company has made provision for Minimum Alternative Tax (MAT) during the year ended 31st March, 2015.

5. EMPLOYEE BENEFITS

(a) Defined Contribution Plans:

The Company has recognized the contribution/liability in the profit & loss account for the financial year 2014-15.

6. GOING CONCERN BASIS

To comply with the directives of the Reserve Bank of India the company ceased to accept deposits from September 1997. Despite cessation of business, substantial accumulated losses, provision for full NPA's and interest payable, rejection of the "old scheme under review" and winding up petition filed by the Reserve Bank of India and various creditors of the company, the accounts of the company have been prepared on a "going concern" basis on an assumption & premises made by the management that

(a) the fresh restructuring scheme would be approved by the Hon'ble Delhi High Court,

(b) adequate finances and opportunities would be available in the foreseeable future to enable the company to start operating on a profitable basis,

(c.) injection of Rs.1,950.00 Lacs as promoters quota infused by the management group

7. BALANCE CONFIRMATION

(a) Balance confirmation of bills receivable and payable, advances recoverable in cash or in kind, receivables and payables relating to lease and hire purchase, lease security deposit of which party wise details are not available. Balance confirmation of inter-corporate deposits, balance of ex-employees, margin against L/C, loans from institutions, banks, and other receivables and payables have not been received from the parties/persons concerned. In the absence of balance confirmation the closing balances as per books of accounts have been incorporated in the final accounts and have been shown, unless otherwise stated by the management about its recoverability in the financials including considering the NPA Provisions, are good for recovery/payment. Time barred debts under the Limitations Act have not been separately ascertained and written off or provided for. In the absence of such confirmation & corresponding reconciliation, the financial impact cannot be ascertained.

8. Payment to Directors

The company has obtained the approval for payment of managerial remuneration from Ministry of Corporate Affairs, Government of India for the amount not exceeding Rs.3.99 Lacs per annum for the period of three years starting from 01-12-2011 to 30-11-2014. The proportionate amount of Managerial Remuneration of pertaining to the period from 01-April-2014 to 30th November- 2014 is Rs.2.66 Lacs.

9. Related Party disclosure

As required by Accounting Standard - AS 18 "Related Party Disclosure" as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 are as follows:

List of related parties with whom transactions have taken place during the year:

I Control Exist - Subsidiary Company

(i) Global IT Option Limited

II Significant Influence Exist

(i) DCM Services limited

(ii) DCM International Limited

(iii) DCM Anubhavi Marketing Private Limited

III Key Management Personnel

(i) Mr. O. P. Gupta - Chairman

(ii) Mr. Surender Kumar Sharma - Executive Director

(iii) Mr. Rajeshwar Singh- Non Executive Director

10. The company's application to RBI for certificate of registration (CoR) as a NBFC had been rejected by the RBI in year 2004. The company had made an appeal to the Appellate Authority, Ministry of Finance which directed the RBI to keep its order of rejection of CoR in abeyance for a period of six months and directed the company to file Fresh Restructuring Scheme before Hon'ble Delhi High Court. RBI has preferred an appeal before the Hon'ble Delhi High Court against the order of the appellate authority, which is still pending.

11. The company had no outstanding dues to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006, (MSMED Act) as at March 31,2015.

12. As the Company's business activity falls within a single primary business segment "Financing Operations viz., inter corporate deposits and investments", the disclosure requirements of Accounting Standard (AS 17) "Segment Reporting" as prescribed under Section 133 of the Companies Act, 2013 ('Act') read with Rule 7 of the Companies (Accounts) Rules, 2014 are not required to be furnished.

13. PREVIOUS YEARS FIGURES

Previous year figures have been re-grouped/reclassified, wherever necessary. The figures of current reporting period as well as previous period consist of 12 months ended on 31 March, 2015.


Mar 31, 2014

1. Terms/ Rights attached to Shares Equity Shares

The company has only one class of Equity Shares having a par value of Rs. 10 per Share. Each holder of equity is entitled to one vote per share.

2. I) Capital Reserves

Rs. 193.87 lacs in the capital reserve account consists of surpluses realized from settlement with the debentures and other liabilities not payable, which in the opinion of the management have been transferred to Capital Reserve since these amounts do not relate to trading activities.

II) Debenture Redemption Reserve

Debenture Redemption Reserve for Series "B" has not been created during the year in view of the carry forward losses suffered by the company in the past.

III) Special Reserve

In the year 1996-97, the RBI under the clause 45IC has made it manadatory for NBFC''s to create a reserve of at least 20% before declaration of dividend.

3. As per consent letters received, expenditure incurred/repayment made by the company amounting to Rs. 549.72 lacs funded by the group companies till June.2007, have been credited to the Share Application Account. Company has passed special resolution to allot such shares. However the same is subject to sanction of Revised Restructuring Scheme by the Hon''ble Delhi High Court.

4. a) During the year ended 31st March, 2014, Rs. 0.20 lacs has been paid towards "B" Series debenture holder (19.5% Regular) on compassionate grounds after getting approval from Hon''ble Delhi High Court.

b) Scheme "A" Series

The company had allotted the Debenture A'' series on 28th February, 1996 and 23rd September 1996. Subject to Note 4.1 (d) these debentures are secured against mortgage / hypothecation / charge on assets financed out of the proceeds of these debentures. The outstanding debentures of Rs. 8.50 lacs were overdue as on March 31,2014.

The company proposes to vary the terms of debentures through the scheme of arrangement for reorganation of share capital of the company and for compromise with its secured and unsecured creditors.

c) The value of assets charged in favour of debentures has been depleted over a period of time but the depletion has not been ascertained. To the extent of shortfall, if any, the liability is unsecured.

e) A supplementary trust deed forgiving effect to the proposed repayment plans as provided in Clause 44 of the Trust deed has not been prepared by the trustees so far.

f) Provision of interest on debentures up to 31st March, 2014 calculated @ 10% p.a. of simple interest as per renewal offer letter of 1998 on 19.5% Debenture "B" Series and regular interest on Debenture "A" Series amounting to approximately Rs. 4,057.54 lacs has not been provided since a Fresh Restructuring Scheme that is subject to the approval of the Hon''ble High Court of Delhi has been submitted which does not envisage payment of any interest. To the extent of the non-provision of interest calculated as per renewal offer letter of 1998, and considering the current year interest of Rs. 255.50 lacs , the current period profits are overstated to the extent of Rs. 255.50 lacs and cumulative net losses are understated to the extent of Rs. 4,057.54 lacs. The difference between the original contracted interest @ 19.5% and as per offer letter @ 10% has also not been ascertained and provided for pending approval of the fresh scheme. To the extent of interest of Rs. 4057.54 lacs not provided cumulative net loss is understated.

g) i. The Central Bank of India, Mumbai, Trustees for the Non-Convertible Debentures B-Series have filed a suit for recovery of Rs. 4,423.86 lacs on 14th October, 1999 before the Hon''ble Mumbai High Court. As against the claim of Rs. 4,423.86 lacs filed by The Central Bank of India, Mumbai, Trustees for The Non-Convertible Debentures "B" Series, Rs. 2,546.55 lacs on account of principal and interest is already reflected in the books as on date. In view of the Fresh Restructuring Scheme seeking waiver of interest payable to debenture holders, no provision has been made for the difference between the claim made by the Central Bank of India and the liability as per the books which comes to Rs. 1,877.31 lacs and to this extent the cumulative net losses of Rs. 1,877.31 lacs is understated.

ii. The Hon''ble Mumbai High Court vide its interim order dated 24th December, 1999 has passed an order that all receipts from hypothecated assets shall be deposited with the trustees in a separate bank account except for amounts utilized as per orders of The Reserve Bank of India and the Company Law Board.

iii. The suits filed by the Central Bank of India before the Hon''ble Mumbai High Court has been stayed by Hon''ble High Court of Delhi vide order dated 14 September 2005 on application made by the company and there is no change in the status as at 31st March, 2014.

5. a (i) Hypothecation / charge on assets financed out of the said loan.

(ii) The aforesaid amount outstanding Rs. 36.30 lacs is overdue for payment.

b The value of the assets charged in favour of institutions have depleted over a period of time and the depletion has not been ascertained. To the extent of the shortfall, if any, the liability is unsecured.

c The amount due has been quantified at Rs. 45.38 as per the "Old Scheme Under Review". However, under the Fresh Restructuring Scheme the interest payable amounting to Rs. 9.08 is sought to be waived and has already been written back in the earlier year. The principal amount due as on 30th June, 2004 amounting to Rs. 36.30 is proposed to be repaid in 3 equal installments of Rs. 12.10 from the 2nd year of the effective date. However no such payment has been made.

d SIDBI has filed a petition for winding up on alleged non-payment of Rs. 54.40 lacs which consist of interest, overdue interest and other charges, before the Hon''ble Delhi High Court on which stay has been granted by the Hon''ble Delhi High Court. Provision for such liability on account of interest, overdue interest, and other charges claimed and claimable by SIDBI has not been ascertained and provided for due to waiver of interest sought under the "Fresh Scheme".

* Amount due to banks are secured against the assets financed out of the said facilities and hypothecated to the bank.

6. (i) The value of the assets charged in favour of banks have depleted over a period of time and the depletion has not been ascertained. To the extent of the shortfall, if any, the liability is unsecured.

(ii) PUNJAB & SIND BANK (PSB): As per the Fresh Restructuring Scheme, the total amount payable to PSB remains quantified at Rs. 901.80 lacs as on 30th June 2004. (after providing interest @10% p.a., compounded quarterly from 30th September 1999 till 31st March, 2000 on the principal debt as on 30.09.1997). Out of this 60% of Rs.901.80 iacs i.e. Rs.541.08 lacs. shall be payable in 6 equal yearly installments after one year from the date of approval of the scheme or 1 st April,2006 whichever is earlier. The balance 40% shall be discharged by issuing equity shares at any time within 3 years of the effective date or 1st April, 2006 which ever is earlier. The company has till date paid/ adjusted Rs. 98.40 lacs and the balance of Rs. 803.40 lacs as on 30th June 2008 is payable as per the Fresh Restructuring Scheme pending before the Hon''ble Delhi High Court. Pursuant to an earlier agreement with the bank, from April 1, 2000 till 31 st March 2005, interest at a compounded half yearly rate of 10% p.a. has been computed at Rs. 395.97 lacs, which has already been paid by way of allotment of equity shades of Rs. 101- each at a premium of Rs. 20/- on 31 st March 2001. In the event of default in the payment of interest and principal, the concessions made by PSB shall stand withdrawn and their claim settled before the Debt Recovery Tribunal of Rs. 1,217.52 lacs will become payable with immediate effect. Interest payable from 01.04.2005 to 31.03.2014 is also not provided since a Fresh Restructuring Scheme, which is subject to the approval of Hon''ble High Court of Delhi, has been submitted which does not envisage payment of any interest. Considering the default in payment, the claim of Rs 1,217.52 lacs filed before the Debt Recovery Tribunal and to the extent of interest, overdue interest, default charges not provided for net profit for the year is overstated and cumulative net loss is understated to that extent.

(iii) Indusind Bank: The amount payable to Indusind Bank after calculating interest up to March 31,2000 had been quantified at Rs. 916.64 lacs in accordance with the "Old Scheme Under Review". The company has till date paid/adjusted Rs. 339.64 lacs and the balance of Rs.577.00 lacs as on 30th June 2008 is also payable as per the Fresh Restructuring Scheme. Pursuant to an earlier agreement with the bank, from April 1, 2000 till 31st March 2005, interest at a compounded half yearly rate of 10% p.a. has been computed at Rs. 300.20 lacs, which has already been paid by way of allotment of equity shares of Rs. 10/- each at a premium of Rs. 20/-on 31st March 2001. In the event that the company fails to pay the interest or principal, the concessions made by Indusind Bank will be withdrawn and the amount claimed in the Debt Recovery Tribunal amounting to Rs. 1,042.42 lacs would be payable with immediate effect. Interest payable from 01.04.2005 to 31.03.2014 is also not provided since a Fresh Restructuring Scheme, which is subject to the approval of Hon''ble High Court of Delhi, has been submitted which does not envisage payment of any interest. In considering the default in payment the claim of Rs 1,042.42 lacs filed before the Debt Recovery Tribunal and to the extent of interest, overdue interest, default charges not provided, net profit for the year is overstated and cumulative net loss is understated to that extent.

7. FIXED DEPOSITS ACCEPTED

(a) During the year 31" March, 2014 Rs. 2.48 lacs has been paid to Fixed Deposit holder on compassionate ground after getting approval from Hon''ble Delhi High court. Interest of Rs. 0.42 lacs has been paid on the fixed deposits amounted Rs. 0.18 lacs as per the order of Consumer Forum, Kolkata.

(b) In respect of repayment of outstanding deposits with interest vide order dated 17.07.98, the Company Law Board had ordered payment of interest at contracted rates up to the date of maturity and at 10% thereafter. Due to liquidity problems, the company has not fully followed the schedule of repayment ordered by the Company Law Board. However, a Fresh Restructuring Scheme of arrangement for re-organization of the share capital of the company and for compromise with its creditors including fixed depositors has been made in which interest dues will be waived and accordingly provision of interest payable amounting to Rs. 827.06 lacs has been written back in earlier years.

(c) The Company has also moved an application before the Hon''ble Company Law Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing a fresh repayment schedule to fixed depositors of the Company before the Fresh Restructuring Scheme was filed before the Hon''ble Delhi High Court.

(d) Fixed deposits and bills payable as per information retained on the computer is Rs.5,642.97 lacs whereas fixed deposits, which also includes bills payable, as per books, amounts to Rs.5,632.27 lacs and the difference of Rs. 10.69 lacs is un-reconciled. The company, in accordance with a subsequently confirmed order of the Hon''ble Company Law Board dated July 17,1998 had given an option to the creditors of overdue bills rediscounted to convert their dues into fixed deposits on due dates retrospectively. Bills rediscounted, including those converted into fixed deposits, have been reflected under fixed deposits.

(e) Liability on account of Fixed Deposits received contain certain deposits which appear prima- facie to be suspect due to either lack of identification of depositors or no claim or confirmation having been received by the company. Payment of those deposits that are under a suspicious category will be made under the proposed Fresh Restructuring Scheme of arrangement only after the evidence of receipt of money is established.

(f) Provision for interest on fixed deposits up to March 31,2014 calculated at simple interest @ 10% p.a. in accordance with the order of The Hon''ble Company Law Board amounting to approx. Rs.9,855.56 lacs (including Rs. 9,287.99 lacs for the earlier years) has not been made in view of the "Fresh Restructuring Scheme" pending before the Hon''ble Delhi High Court wherein the company does not envisage payment of any interest. To the extent of non- provision of interest @10% as per the previous CLB order, the current year profits are overstated to the extent of approximately Rs.564.28 lacs and cumulative net losses are understated to the extent of approximately Rs. 9,855.56 lacs. The difference between the contracted rate of interest and rate of interest @ 10% has also not been ascertained and provided for.

(g) Due to a liquidity crises in the past the minimum liquid assets @15% of fixed deposits as per RBI directives has not been maintained by the company. The company has applied to the Reserve Bank of India and the Company Law Board for exemption from maintaining minimum liquid assets and payment of penal interest but the disposal of the application is still pending.

8. SBI Home Finance Ltd.(SBIHF):-

The company has already paid Rs. 290.00 lacs under the Old Scheme and proposes to allot shares worth Rs. 25.00 lacs for the balance as per the Fresh Restructuring Scheme in the first year from the effective date (Effective date means the date of filling of the certified copy of the order sanctioning the scheme of the Honorable High Court of Delhi at New Delhi with the Registrar of Companies of Delhi & Haryana). SBIHF has removed a charge on its assets and therefore the loan is now categorized as unsecured loan.

9. Inter-Corporate Deposits

The value of inter corporate deposits is Rs 27.17 lacs. Provision for interest on inter corporate deposits up to 31st March, 2014 amounting to approximately Rs. 107.22 lacs which includes approximately Rs.100.91 lacs for the earlier years, has not been made in view of the "Fresh Restructuring Scheme" pending before the Hon''ble High Court of Delhi wherein the company does not envisage payment of any interest. The current year interest is Rs 6.32 lacs .To the extent of non-provision of interest, the current year''s profits are overstated to the extent of approximately Rs. 6.32 lacs and cumulative net losses are understated to the extent of approximately Rs 107.22 lacs.

Note6.1 As per the guidelines of Non-Banking Financial Companies Prudential Norms Directions, 1998 issued and prescribed by Reserve bank of India, assets and receivables are required to be classified as NPAand provision for non-performing assets as prescribed is required to be made. The provision fon non-performing assets as per these Directions on , inter-corporate deposits , bills receivable and other long term trade receivable has been made by Rs.2,060.56 lacs during the year ended 31st March, 2014. Please also refer Note No. 11, 11.2,12 and 21.

Note 10. During the year ended 31st March, 2014 provision has been made on Employee advaces and other long term advances considered as doubtful debt by Rs.28.08 lacs.

11. Employees Advances

During the year Provision has been made against the employees advances upto 100% amounted Rs. 17.69 lacs.

12. Inventory Valuation Method:-

(a) During the year there were no transactions relating to sale/purchase of stocks/ investment in shares. During the period ended 31 st March, 2014, those shares which were held as bad deliveries have been removed from the schedule of stock in trade. The same will be shown when such shares/stock which are termed as bad deliveries are actually transferred in the name of company.

(b) The inventory of Securities is valued at Market value & Cost which ever is lower.

(c) For the untraded shares, value has been taken as Re. 1 /= per Company.

(d) For partly paid-up shares, Re.1 for untraded company hasbeentaken.

(e) Bonus shares forwhich original shares not available is valued at Re.Zero per shares

13. i) Bank Balance of Rs. 15.16 lacs appearing in the books of accounts pertaining to 14 Banks were yet to be confirmed by the Banks as at 31st March, 2014. The same are anticipated to be confirmed by the said banks.

ii) These are restricted bank balance and cannot be operated with out getting prior approval of Hon''ble Delhi High Court.

iiii) During the year ended 31-March-2014, provision for bank balances has been made by Rs. 2.07 against those banks which are non-operated and balance confirmation has not been received for the same from the respective banks.

14. Prior period includes Expense of Electricity in the name of ledger of Water Gas and Electricity expense of office in the books of accounts of the company and in previous year it includes Consultancy and Retainership charges.

15. CONTINGENT LIABILITIES & OTHER COMMITMENTS

(a) Claims lodged and contingent liability arising out of suits and winding up petitions filed against the company not acknowledged as debts amounts to Rs. 826.38 lacs. There are also other cases filed in consumer and other courts against the company for which the company is contingently liable but for which the amount has not been ascertained.

(b) Punjab & Sind bank has filed a recovery suit before the Debt Recovery Tribunal (DRT) for recovery of Rs. 1217.52 lacs against which the amount payable to them, as per books is Rs. 803.40 lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs. 414.12 lacs has been made. Since the company has not made payment of interest & principal in accordance with the Fresh Restructuring Scheme filed with the Hon''ble High Court, Rs 1217.52 became payable to PSB. No provision for the difference of Rs. 414.12 lacs has been made by the company.

(c) Induslnd Bank has filed a recovery suit before the Debt Recovery Tribunal (DRT), of Rs. 1042.42 lacs against which the amount payable to them as per books is Rs. 577.00 lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs. 465.42 lacs has been made.

(d) During the year ended 30* June, 2009, the company had received Rs. 100.00 lacs from one of its debtors and reduced the same amount from his recoverable balance. Subsequently the Hon''ble Punjab and Haryana Court deemed that payment to be an out of turn payment and asked the company to deposit the amount. The company had filed a SLP with the Hon''ble Supreme Court of India which has been dismissed by them. Therefore the company is liable to deposit the amount mentioned above which has yet to be deposited.

(e) During the year ended 30* June, 2011 the company''s tenant has filed a claim of Rs 100.00 lacs against the company due to damages suffered by the tenant which is pending under arbitration proceedings.

(f) As explained to us, there is a disputed demand of Rs. 152.12 lakhs and Rs. 141.74 lakhs for the Assessment Year 2009-10 and 2010-11 respectively for payment of income tax under the Income Tax Act, 1961, which is disputed by the company as the brought forward losses under the Income Tax Act has not been allowed by the department and rectification application for deletion of above said two demands has been filed by the company which is pending before the appropriate authorities.

(g) There is an award passed by the arbitrator against the company in the matter of MS Shoes East Limited on May 28,2012 for Rs. 51.28 lacs i.e. claim amount along with interest of Rs. 307 lacs for an underwriting given by the company in the year 1995 for the public issue of M/s MS Shoes East Ltd. The same has been contested by Company before Hon''ble Delhi High Court.

16. RESTRUCTURING SCHEME

The management for a structured debt repayment had prepared two schemes of arrangement for reorganization of share capital of the company and for compromise with its secured and unsecured creditors. Both the schemes of arrangement envisage a viable, just & equitable settlement with its secured and unsecured creditors while simultaneously increasing the risk and stake of the promoters and their shareholding through fresh infusion of funds by the promoter company.

The company has also moved an application before the Hon''ble Company Law Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing a fresh repayment schedule to fixed depositors of the Company. The same repayment schedule has been included in the fresh restructuring scheme filed before the Hon''ble High Court of Delhi at New Delhi on 24th September 2004.

The implementation of the schemes is subject to the fulfillment of all the conditions of section 391 to section 394 of the Companies Act and approval/orders of the Hon''ble Delhi High Court. The Hon''ble Delhi High Court did not approve the company''s first scheme filed in May 2000, though approved by the secured and unsecured creditors in their respective meetings convened pursuant to the orders of the Hon''ble Court, yet the Hon''ble Court did not accord sanction to the scheme on technical grounds. An application for review had been filed before the Hon''ble Delhi High Court on 30* May 2003, which is yet to be listed for hearing and which is hereinafter, wherever applicable, referred to as the "old scheme under review". The company intends not to pursue the review application filed for the old scheme under review before the Hon''ble Delhi High Court and it is proposed to be withdrawn at an appropriate stage of the proceedings forthe sanction of "the fresh scheme".

The company has filed a fresh Scheme of Arrangement for the reorganization of the share capital of the company and for compromise with the secured and unsecured creditors of the company, hereinafter referred to as the "fresh scheme" before the Hon''ble Delhi High Court at New Delhi on 24* September 2004.

Pursuant to the orders of the Hon''ble Delhi High Court, the unsecured creditors and debenture holders in their meeting convened under the Chairpersonship of court appointed chairpersons (retired Judges of Hon''ble Delhi High Court) on 1st April 2005 and 2nd] April, 2005 have approved the scheme without any modifications with the requisite majority. The meeting of the other secured creditors (banks/ institutions) was held on 17th September 2005 and has also approved the scheme by the requisite majority after considering some modifications proposed by the Punjab & Sind Bank.

The promoter company has undertaken, subject to sanction of the scheme by the Hon''ble Delhi High Court, to contribute to Rs. 1,950 Lacs of which has been already deposited with the Registrar of the Hon''ble Delhi High Court.

The fresh scheme is conditional upon the following approvals and shall be deemed to be effective on obtaining the last of the approvals and the occurrence of the last of the following events: -

i. Sanction of the scheme by the Hon''ble High Court of Delhi under Sections 391 and 394 of the Act and other applicable provisions of the Act, Rules and Regulations, as the case may be;

ii. Filing of certified copies of the order of the Hon''ble High Court of Delhi with the Registrar of Companies (Delhi and Haryana).

The restructured debts of the company for each category of debt is on the basis of outstandings as envisaged in the fresh scheme filed in the year 2004 excluding interest not provided for and all liquidated damages/penal charges and interest on unpaid interest. The "Fresh Scheme of Arrangement" is drawn on the basis of acceptance of waiver of payment of past and future interest, penal charges, liquidated damages, and any other charges, costs and claims etc. except as provided and for values contained therein which is subject to the approval of the Hon''ble Delhi High Court.

The accounts of the company have been drawn on the assumption that the "fresh scheme" will be accepted and implemented. If it is not accepted and cannot be implemented for any reason the total liability before the proposed restructuring scheme including those for which no provision has been made and has been quantified under appropriate heads, shall become payable.

The fresh scheme is pending before the Hon''ble Delhi High Court as at 31st March, 2014 & there is no change in the status at the time of adoption of the financials for the period ended 31st March, 2014 by the Board of Directors.

17. Deposit of Rs 1,950 Lacs by DCM Services Limited

DCM Services Ltd as a promoter has committed to bring in Rs 19.50 Cr as a promoter contribution upon sanction of their restructuring scheme u/s 391 of the Indian Companies Act, 1956 which is presently pending for sanction before the Hon''able Delhi High Court.

The Court vide order dated 06.05.2008 has asked DCM Services Limited to deposit Rs. 1,950 Lacs with the Court and pursuant to the court order, They have deposited (Rs 500 Lacs on 16.07.2010, Rs 670 Lacs on 18.11.2010, Rs. 390 Lacs on 21.04.2011 & Rs. 390 Lacs on 27.04.2012 aggregating to Rs. 1,950 Lacs on behalf of the promoters with the Registrar, Hon''ble Delhi High Court. No financial impact of this has been recorded in the financials of the company for the period ended 31st March, 2014.

18. INCOME TAX

(a) Deferred Tax Assets

In accordance with Accounting Standard-22 issued by The Institute of Chartered Accountants of India, deferred tax assets on accumulated depreciation and losses have not been accounted for since as per certain operational restrictions imposed, the company is unable to conduct any new business and therefore it is uncertain whether there will be sufficient future taxable income against which such deferred tax assets can be realized. Accordingly in view of absence of virtual certainty of sufficient taxable income in future no provision for deferred tax has been made.

(b) Tax Provision

The company has not made/retained any provision for income tax during the year since the company has substantial accumulated/ brought forward losses from earlieryears.

Notes:

(a) The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotion and other relevant factors;

(b) The liability towards gratuity & the earned leave for the period ended 31st March, 2014, based on actuarial valuation amounting to Rs 1.37 lacs. & Rs. 1.07 lacs have been recognized in the profit & loss account.

19. GOING CONCERN BASIS

To comply with the directives of the Reserve Bank of India the company ceased to accept , deposits from September 1997. Despite cessation of business, substantial accumulated losses, provision for full NPA''s and interest payable, rejection of the "old scheme under review" and winding up petition filed by the Reserve Bank of India and various creditors of the company, the accounts of the company have been prepared on a "going concern" basis on an assumption & premises made by the management that

(a) the fresh scheme would be approved by the Hon''ble Delhi High Court,

(b) after approval of the scheme, adequate finances and opportunities would be available in the foreseeable future to enable the company to start operating on a profitable basis,

(c) the promoters of the Company have provided letter of support, and

(d) considering the injection of Rs. 1,950 Lacs as promoters quota.

20. BALANCE CONFIRMATION

(a) Balance confirmation of bills receivable and payable, advances recoverable In cash or in kind, receivables and payables relating to lease and hire purchase, lease security deposit of which party wise details are not available. Balance confirmation of inter-corporate deposits, balance of ex-employees, margin against L/C, loans from institutions, banks, and other receivables and payables have not been received from the parties/persons concerned. In the absence of balance confirmation the closing balances as per books of accounts have been incorporated in the final accounts and have been shown, unless otherwise stated by the management about its recoverability in the financials including considering the NPA Provisions, are good for recovery/payment. Time barred debts under the Limitations Act have not been separately ascertained and written off or provided for. In the absence of such confirmation & corresponding reconciliation, the financial impact cannot be ascertained.

21. Payment to Directors

The company has obtained the approval for payment of managerial remuneration from Ministry of Corporate Affairs, Government of India for the amount not exceeding Rs. 3.99 lacs per annum forthe period of three years starting from 01-12-2011 to 30-11-2014.

22. The company''s application to RBI for certificate of registration (CoR) as a NBFC had been rejected by the RBI in year 2004. The company had made an appeal to the Appellate Authority which directed the RBI to keep its order of rejection of CoR in abeyance for a period of six months during which the Company shall file a revised scheme for restructuring. RBI has preferred an appeal before the Hon''ble Delhi High Court against the order of the appellate authority, which is still pending.

23. The company had no outstanding dues to suppliers under The Micro, Small and Medium Enterprises Development Act, 2006, (MSMED Act) as at March 31,2014.

24. Figures for the previous have been regrouped and recast wherever necessary.The figures have been given in lacs.


Mar 31, 2013

1. CONTINGENT LIABILITIES & OTHER COMMITMENTS

(a) Claims lodged and contingent liability arising out of suits and winding up petitions filed against the company not acknowledged as debts amounts to Rs 868 18 lacs. There are also other cases filed in consumer and other courts against the company for which the company is contingently liable but for which the amount has not been ascertained.

(b) Punjab & Sind bank has filed a recovery suit before the Debt Recovery Tribunal (DRT) for recovery of Rs. 1217.52 lacs against which the amount payable to them, as per books is Rs. 803.40 lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs. 414.12 lacs has been made. Since the company has not made payment of interest & principal in accordance with the Fresh Restructuring Scheme filed with the Hon''ble High Court, Rs 1217.52 became payable to PSB. No provision for the difference of Rs. 414.12 lacs has been made by the company.

(c) IndusInd Bank has filed a recovery suit before the Debt Recovery Tribunal (DRT), of Rs. 1042. 42 lacs against which the amount payable to them as per books is Rs. 577.00 lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs. 465.42 lacs has been made.

(d) During the year ended 30th June, 2009, the company had received Rs. 100.00 lacs from one of its debtors and reduced the same amount from his recoverable balance. Subsequently the Hon''ble Punjab and Haryana Court deemed that payment to be an out of turn payment and asked the company to deposit the amount. The company had filed a SLP with the Hon''ble Supreme Court of India which has been dismissed by them. Therefore the company is liable to deposit the amount mentioned above which has yet to be deposited.

(e) During the year ended 30th June, 2011 the company''s tenant has filed a claim of Rs 100.00 lacs against the company due to damages suffered by the tenant which is pending under arbitration proceedings.

(f) There is a disputed a demand of Rs. 152.12 lakhs and Rs. 141.74 lakhs for the Assessment Year 2009-10 and 2010-11 respectively for payment of income tax under the Income Tax Act, 1961, which is disputed by the company as the brought forward losses under the Income Tax Act has not been allowed by the department and rectification application for deletion of above said two demands has been filed by the company which is pending before the appropriate authorities.

(g) There is an award passed by the arbitrator against the company in the matter of MS Shoes East Limited on May 28, 2012 for Rs. 51.28 lacs i.e. claim amount along with interest of Rs. 307 lacs for an underwriting given by the company in the year 1995 for the public issue of M/s MS Shoes East Ltd. The same has been contested by Company before Hon''ble Delhi High Court.

2 RESTRUCTURING SCHEME

The management for a structured debt repayment had prepared two schemes of arrangement for reorganization of share capital of the company and for compromise with its secured and unsecured creditors. Both the schemes of arrangement envisage a viable, just & equitable settlement with its secured and unsecured creditors while simultaneously increasing the risk and stake of the promoters and their shareholding through fresh infusion of funds by the promoter company.

The company has also moved an application before the Hon''ble Company Law Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing a fresh repayment schedule to fixed depositors of the Company. The same repayment schedule has been included in the fresh restructuring scheme filed before the Hon''ble High Court of Delhi at New Delhi on 24th September 2004.

The implementation of the schemes is subject to the fulfillment of all the conditions of section 391 to section 394 of the Companies Act and approval/orders of the Hon''ble Delhi High Court. The Hon''ble Delhi High Court did not approve the company''s first scheme filed in May 2000, though approved by the secured and unsecured creditors in their respective meetings convened pursuant to the orders of the Hon''ble Court, yet the Hon''ble Court did not accord sanction to the scheme on technical grounds. An application for review had been filed before the Hon''ble Delhi High Court on 30th May 2003, which is yet to be listed for hearing and which is hereinafter, wherever applicable, referred to as the "old scheme under review". The company intends not to pursue the review application filed for the old scheme under review before the Hon''ble Delhi High Court and it is proposed to be withdrawn at an appropriate stage of the proceedings for the sanction of "the fresh scheme".

The company has filed a fresh Scheme of Arrangement for the reorganization of the share capital of the company and for compromise with the secured and unsecured creditors of the company, hereinafter referred to as the "fresh scheme" before the Hon''ble Delhi High Court at New Delhi on 24th September 2004.

Pursuant to the orders of the Hon''ble Delhi High Court, the unsecured creditors and debenture holders in their meeting convened under the Chairpersonship of court appointed chairpersons (retired Judges of Hon''ble Delhi High Court) on 1st April 2005 and 2nd April, 2005 have approved the scheme without any modifications with the requisite majority. The meeting of the other secured creditors (banks/ institutions) was held on 17th September 2005 and has also approved the scheme by the requisite majority after considering some modifications proposed by the Punjab & Sind Bank.

The promoter company has undertaken, subject to sanction of the scheme by the Hon''ble Delhi High Court, to contribute to Rs. 19.50 crores of which Rs.15.60 crores were deposited with the Registrar of the Hon''ble Delhi High Court Registrar, as per court order by the promoter group, and the balance amount of Rs 3.90 crores has been deposited on 27th April, 2012.

The fresh scheme is conditional upon the following approvals and shall be deemed to be effective on obtaining the last of the approvals and the occurrence of the last of the following events: -

i. Sanction of the scheme by the Hon''ble High Court of Delhi under Sections 391 and 394 of the Act and other applicable provisions of the Act, Rules and Regulations, as the case may be;

ii. Filing of certified copies of the order of the Hon''ble High Court of Delhi with the Registrar of Companies (Delhi and Haryana).

The restructured debts of the company for each category of debt is on the basis of outstandings as envisaged in the fresh scheme filed in the year 2004 excluding interest not provided for and all liquidated damages/penal charges and interest on unpaid interest. The "Fresh Scheme of Arrangement" is drawn on the basis of acceptance of waiver of payment of past and future interest, penal charges, liquidated damages, and any other charges, costs and claims etc. except as provided and for values contained therein which is subject to the approval of the Hon''ble Delhi High Court.

The accounts of the company have been drawn on the assumption that the "fresh scheme" will be accepted and implemented. If it is not accepted and cannot be implemented for any reason the total liability before the proposed restructuring scheme including those for which no provision has been made and has been quantified under appropriate heads, shall become payable.

The fresh scheme is pending before the Hon''ble Delhi High Court as at 31st March, 2013 & there is no change in the status at the time of adoption of the financials for the period ended 31st March, 2013 by the Board of Directors.

3. Deposit of Rs 19.50 Crore by DCM Services Limited

DCM Services Ltd as a promoter has committed to bring in Rs 19.50 Cr as a promoter contribution upon sanction of their restructuring scheme u/s 391 of the Indian Companies Act, which is presently pending for sanction before the Hon''able Delhi High Court.

The Court vide order dated 06.05.2008 has asked DCM Services Limited to deposit Rs. 19.50 crores with the Court and pursuant to the court order, They have deposited (Rs 5.00 crores on 16.07.2010, Rs 6.70 crores on 18.11.2010, Rs. 3.90 crores on 21.04.2011 & Rs. 3.90 on 27.04.2012 aggregating to Rs. 19.50 crores on behalf of the promoters with the Registrar, Hon''ble Delhi High Court. No financial impact of this has been recorded in the financials of the company for the period ended 31st March, 2013.

4. INCOME TAX

(a) Deferred Tax Assets

Currently the main source of income of the company constitutes only interest on fixed deposits and rental income. However, against rental income auditors have qualified our independent auditor''s report on the basis of non-provisioning of doubtful debts of rent receivable. Moreover income tax demand for previous years was raised by income tax department against disallowance of brought forward losses and the same is still under dispute. After considering the above mentioned facts and in view of absence of virtual certainty of sufficient taxable income in future no provision for deferred tax has been made

(b) Tax Provision

The company has not made/retained any provision for income tax during the year since the company has substantial accumulated/ brought forward losses from earlier years.

5. EMPLOYEE BENEFITS

(a) Defined Contribution Plans:

The Company has recognized the contribution/liability in the profit & loss account for the financial year 2012-13.

(b) Defined Benefit Plans & Other Long Term Benefits:

The following disclosures are made in accordance with AS 15 (Revised) pertaining to Defined Benefit Plans and Other Long Term Benefits:

Notes:

(a) The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotion and other relevant factors;

(b) The liability towards gratuity & the earned leave for the period ended 31st March, 2013, based on actuarial valuation amounting to Rs 1.01 lacs. & Rs. 0.67 lacs have been recognized in the profit & loss account.

6. GOING CONCERN BASIS

To comply with the directives of the Reserve Bank of India the company ceased to accept deposits from September 1997. Despite cessation of business, substantial accumulated losses, non-provision for full NPA''s and interest payable, rejection of the "old scheme under review" and winding up petition filed by the Reserve Bank of India and various creditors of the company, the accounts of the company have been prepared on a "going concern" basis on an assumption & premises made by the management that

(a) the fresh scheme would be approved by the Hon''ble Delhi High Court,

(b) adequate finances and opportunities would be available in the foreseeable future to enable the company to start operating on a profitable basis,

(c) the promoters of the Company have provided letter of support, and

(d) injection of Rs. 19.50 crores as promoters quota.

7. BALANCE CONFIRMATION

(a) Balance confirmation of bills receivable and payable, advances recoverable in cash or in kind, receivables and payables relating to lease and hire purchase, lease security deposit of which party wise details are not available. Balance confirmation of inter-corporate deposits, balance of ex-employees, margin against L/C, loans from institutions, banks, and other receivables and payables have not been received from the parties/persons concerned. In the absence of balance confirmation the closing balances as per books of accounts have been incorporated in the final accounts and have been shown, unless otherwise stated by the management about its recoverability in the financials including considering the NPA Provisions, are good for recovery/payment. Time barred debts under the Limitations Act have not been separately ascertained and written off or provided for. In the absence of such confirmation & corresponding reconciliation, the financial impact cannot be ascertained.

8. Payment to Directors

The company has obtained the approval for payment of managerial remuneration from Ministry of Corporate Affairs, Government of India for the amount not exceeding Rs. 3.99 lacs per annum for the period of three years starting from 01-12-2011 to 30-11-2014.

9. The company''s application to RBI for certificate of registration (CoR) as a NBFC had been rejected by the RBI in year 2004. The company had made an appeal to the Appellate Authority which directed the RBI to keep its order of rejection of CoR in abeyance for a period of six months during which the Company shall file a revised scheme for restructuring. RBI has preferred an appeal before the Hon''ble Delhi High Court against the order of the appellate authority, which is still pending.

10. The company had no outstanding dues to suppliers under The Micro, Small and Medium enterprises Development Act, 2006, (MSMED Act) as at March 31, 2013.

11. Previous Years Figures

Figures for the previous year have been regrouped and recast wherever necessary. However, due to the difference in the length of the previous period which consist of nine months & and the current year which consist of 12 months, the figure of the current year in the statement of profit & loss are not comparable with figures of previous period.


Mar 31, 2012

1.1 Capital Reserves

Rs. 193.87 lacs in the capital reserve account consists of surpluses realized from settlement with the debentures and other liabilities not payable, which in the opinion of the management have been transferred to Capital Reserve since these amounts do not relate to trading activities.

1.2 Debenture Redemption Reserve

Debenture Redemption Reserve for Series 'B' has not been created during the year in view of the carry forward losses suffered by the company in the past.

1.3 Special Reserve

In the year 1996-97, the RBI under the clause 45 IC has made it manadatory for NBFC's to create a reserve of at least 20% before declaration of dividend.

2.1 As per consent letters received, expenditure incurred/repayment made by the company amounting to Rs. 549.72 lacs funded by the group companies till June.2007, have been credited to the Share Application Account. Company has passed special resolution to allot such shares. However the same is subject to sanction of Revised Restructuring Scheme by the Hon'ble Delhi High Court.

3.1.a During the year Rs. 1.59 Lacs has been paid to debenture holder on compassionate grounds after getting approval from Hon'ble Delhi High court.

3.1.b Scheme 'A' Series

The company had allotted the Debenture 'A' series on 28th February, 1996 and 23rd September 1996. Subject to Note 4.1 (d) these debentures are secured against mortgage / hypothecation / charge on assets financed out of the proceeds of these debentures. The outstanding debentures of Rs.8.50 Lacs were overdue as on March 31, 2012.

3.1.c Scheme 'B' Series

Debenture 'B' Series were allotted on 5th November, 1996. and subject to Note 4.1 (d) are secured against hypothecation / charge on land and premises situated at Mouje Pirangut, Taluka Mulshi, Distt Pune in the State of Maharashtra alongwith all buildings, structures thereon and all plant and machinery, spares, tools, accessories and other movables of the Company, both present and future, whether installed or not. The total amount of debentures alloted were Rs 2818.04 lacs and matured for redemption on 5th May 1998. Out of total debentures alloted amounting to Rs 2818.04 lacs,debentures of Rs 270.88 lacs have been redeemed upto March 31,2012. The remaning debentures as at March 31, 2012 in the 'B' series amounting to Rs 2547.16 lacs consist of the following:-

The company proposes to vary the terms of debentures through the scheme of arrangement for reorganation of share capital of the company and for compromise with its secured and unsecured creditors. 4.1.d The value of assets charged in favour of debentures has been depleted over a period of time but the depletion has not been ascertained. To the extent of shortfall, if any, the liability is unsecured.

3.1.e A supplementary trust deed for giving effect to the proposed repayment plans as provided in Clause 44 of the Trust deed has not been prepared by the trustees so far.

3.1.f Provision of interest on debentures up to 31st March, 2012 calculated @ 10% p.a. of simple interest as per renewal offer letter of 1998 on 19.5% Debenture "B" Series and regular interest on Debenture "A" Series amounting to approximately Rs. 3,546.52 lacs has not been provided since a Fresh Restructuring Scheme that is subject to the approval of the Hon'ble High Court of Delhi has been submitted which does not envisage payment of any interest. To the extent of the non-provision of interest calculated as per renewal offer letter of 1998, and considering the current year interest of Rs. 192.66, the current period profits are overstated to the extent of Rs. 192.66 lacs. and cumulative net losses are understated to the extent of Rs. 3,546.52 lacs. The difference between the original contracted interest @ 19.5% and as per offer letter @ 10% has also not been ascertained and provided for pending approval of the fresh scheme. To the extent of interest of Rs. 3546.52 lacs not provided cumulative net loss is understated.

3.1.g.(i) The Central Bank of India, Mumbai, Trustees for the Non-Convertible Debentures B-Series have filed a suit for recovery of Rs. 4,423.86 lacs on 14th October, 1999 before the Hon'ble Mumbai High Court. As against the claim of Rs. 4,423.86 lacs by The Central Bank of India, Mumbai, Trustees for The Non-Convertible Debentures "B" Series, Rs. 2547.16 lacs on account of principal and interest is reflected in the books as on date. In view of the Fresh Restructuring Scheme seeking waiver of interest payable to debenture holders, no provision has been made for the difference between the claim made by the Central Bank of India and the liability as per the books and to this extent the cumulative net losses of Rs. 1,876.70 lacs is understated.

3.1.g.(ii) The Hon'ble Mumbai High Court vide its interim order dated 24th December, 1999 has passed an order that all receipts from hypothecated assets shall be deposited with the trustees in a separate bank account except for amounts utilized as per orders of The Reserve Bank of India and the Company Law Board.

3.1.g.(iii) The suits filed by the Central Bank of India before the Hon'ble Mumbai High Court has been stayed by Hon'ble High Court of Delhi vide order dated 14 September 2005 on application made by the company and there is no change in the status as at 31st March, 2012.

3.2.a (i) Hypothecation / charge on assets financed out of the said loan.

(ii) The aforesaid amount outstanding Rs. 36.30 lacs is overdue for payment.

3.2.b The value of the assets charged in favour of institutions have depleted over a period of time and the depletion has not been ascertained. To the extent of the shortfall, if any, the liability is unsecured.

3.2.c The amount due has been quantified at Rs. 45.38 lacs as per the "Old Scheme Under Review". However, under the Fresh Restructuring Scheme the interest payable amounting to Rs. 9.08 lacs is sought to be waived and has already been written back in the earlier year. The principal amount due as on 30th June, 2004 amounting to Rs. 36.30 lacs is proposed to be repaid in 3 equal installments of Rs. 12.10 lacs from the 2nd year of the effective date. However no such payment has been made.

3.2.d SIDBI has filed a petition for winding up on alleged non-payment of Rs. 54.40 lacs which consist of interest, overdue interest and other charges, before the Hon'ble Delhi High Court on which stay has been granted by the Hon'ble Delhi High Court. Provision for such liability on account of interest, overdue interest, and other charges claimed and claimable by SIDBI has not been ascertained and provided for due to waiver of interest sought under the "Fresh

3.3.1 The value of the assets charged in favour of banks have depleted over a period of time and the depletion has not been ascertained. To the extent of the shortfall, if any, the liability is unsecured.

3.3.2 PUNJAB & SIND BANK (PSB): As per the fresh Restructuring scheme, the total amount payable to PSB remains quantified at Rs 901..80 lakhs as on 30th june 2004, (after providing interest @ 10% p.a , compounded quarterly from 30th Septemper 1999 till 31st March, 2000 on the principal debt as on 30.09.1997). Out of this 60% of Rs 901.80 lacs I.e. Rs 541.08 lacs. Shall be payable in 6 equal yearly installments after one year from the date of approval of the scheme or 1st April , 2006 whichever is earliar.The balance 40% shall be discharged by issuing equity shares at any time within 3 years of the effective date or 1st April , 2006 which ever is earliar. The company has till date paid / adjusted Rs 98.40 lacs and the balance of Rs 803.40 lacs as on 30th June 2008 is payable as per the Fresh Restructuring Scheme pending before the Hon'ble Delhi High Court. Pursuant as per the Fresh Retructuring Scheme pending before the Hon'ble Delhi High Court. Pursuant to an earliar agreement with the bank , from April 1, 2004, 2000 till 31st March 2005, interest at a compounded half yearly rate of 10% p.a has been computed at Rs 395.97 lakhs , which has already been paid by way of alloment of equity shares of Rs, 10/- each at a premium of Rs 20/- on 31st March 2001. In the event of default in the payment of interest and principal, the concessions made by PSB shall stand withdrawn and their claim settled before the Debt Recovery Tribunal of Rs 1217.52 lakhs will become payable with immediate effect Interest payable from 01.04.2005 to 31.03.2012 is also , not provided since a Fresh Restructuring Scheme , which is subject to the approval of Hon'ble High Court of Delhi , has been submitted which does not envisage payment of any interest . Considering the default in payment , claim of Rs 1217.52 filed before the the Debt Recovery Tribunal and to the extent of interest , overdue interst , default charges not provided for net profit for the year is overstated and cumulative net loss is understated to that extent.

3.3.3 Indusind Bank: The amount payable to Indusind Bank after calculating interest up to March 31, 2000 had been quantified at Rs. 916.64 lakhs in accordance with the "Old Scheme Under Review". The company has till date paid/adjusted Rs. 339.64 lakhs and the balance of Rs.577.00 lacs as on 30th June 2008 is also payable as per the Fresh Restructuring Scheme. Pursuant to an earlier agreement with the bank, from April 1, 2000 till 31st March 2005, interest at a compounded half yearly rate of 10% p.a. has been computed at Rs. 300.20 lakhs, which has already been paid by way of allotment of equity shares of Rs. 10/- each at a premium of Rs. 20/- on 31st March 2001. In the event that the company fails to pay the interest or principal, the concessions made by Indusind Bank will be withdrawn and the amount claimed in the Debt Recovery Tribunal amounting to Rs. 1042.42 lakhs would be payable with immediate effect. Interest payable from 01.04.2005 to 31.03.2012 is also not provided since a Fresh Restructuring Scheme, which is subject to the approval of Hon'ble High Court of Delhi, has been submitted which does not envisage payment of any interest. In considering the default in payment the claim of Rs 1042.42 filed before the Dept Recovery Tribunal and to the extent of interest , overdue interest , default charges not provided , net profit for the year is overstated and cumulative net loss is understated to that extent.

3.4 FIXED DEPOSITS ACCEPTED

(a) During the year, Rs.3.25 Lacs has been paid to Fixed Deposit holder on compassionate ground after getting approval from Hon'ble Delhi High court.

(b) In respect of repayment of outstanding deposits with interest vide order dated 17.07.98, the Company Law Board had ordered payment of interest at contracted rates up to the date of maturity and at 10% thereafter. Due to liquidity problems, the company has not fully followed the schedule of repayment ordered by the Company Law Board. However, a Fresh Restructuring Scheme of arrangement for re-organization of the share capital of the company and for compromise with its creditors including fixed depositors has been made in which interest dues will be waived and accordingly provision of interest payable amounting to Rs. 827.06 lacs has been written back in earlier years.

(c) The Company has also moved an application before the Hon'ble Company Law Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing a fresh repayment schedule to fixed depositors of the Company before the Fresh Restructuring Scheme was filed before the Hon'ble Delhi High Court.

(d) Fixed deposits and bills payable as per information retained on the computer is Rs.5645.45 lacs whereas fixed deposits, which also includes bills payable, as per books, amounts to Rs.5634.75 lacs and the difference of Rs. 10.70 lacs is un-reconciled. The company, in accordance with a subsequently confirmed order of the Hon'ble Company Law Board dated July 17, 1998 had given an option to the creditors of overdue bills rediscounted to convert their dues into fixed deposits on due dates retrospectively. Bills rediscounted, including those converted into fixed deposits, have been reflected under fixed deposits.

(e) Liability on account of Fixed Deposits received contain certain deposits which appear prima- facie to be suspect due to either lack of identification of depositors or no claim or confirmation having been received by the company. Payment of those deposits that are under a suspicious category will be made under the proposed Fresh Restructuring Scheme of arrangement only after the evidence of receipt of money is established.

(f) Provision for interest on fixed deposits up to March 31, 2012 calculated at simple interest @ 10% p.a. in accordance with the order of The Hon'ble Company Law Board amounting to approx. Rs.8,723.45 lacs (including approximately Rs. 8,297.92 lacs for the earlier years) has not been made in view of the "Fresh Restructuring Scheme" pending before the Hon'ble Delhi High Court wherein the company does not envisage payment of any interest. To the extent of non-provision of interest @10% as per the previous CLB order, the current year profits are overstated to the extent of approximately Rs.425.53 lacs and cumulative net losses are understated to the extent of approximately Rs.8,723.45 lacs. The difference between the contracted rate of interest and rate of interest @ 10% has also not been ascertained and provided for.

(g) Due to a liquidity crises in the past the minimum liquid assets @15% of fixed deposits as per RBI directives has not been maintained by the company. The company has applied to the Reserve Bank of India and the Company Law Board for exemption from maintaining minimum liquid assets and payment of penal interest but the disposal of the application is still pending.

3.5 SBI Home Finance Ltd.(SBIHF): -

The company has already paid Rs. 2.90 crores under the Old Scheme and proposes to allot shares worth Rs. 25 lakhs for the balance as per the Fresh Restructuring Scheme in the first year from the effective date (Effective date means the date of filling of the certified copy of the order sanctioning the scheme of the Honorable High Court of Delhi at New Delhi with the Registrar of Companies of Delhi & Haryana). SBIHF has removed a charge on its assets and

3.6 Inter-Corporate Deposits

The value of inter corporate deposits is Rs 27.17 Lacs. Provision for interest on inter corporate deposits up to 31st March, 2012 amounting to approximately Rs.94.59 lacs which includes approximately Rs.89.86 lacs for the earlier years, has not been made in view of the "Fresh Restructuring Scheme" pending before the Hon'ble High Court of Delhi wherein the company does not envisage payment of any interest. The current year interest is Rs 4.73 Lacs.To the extent of non-provision of interest, the current year's profits are overstated to the extent of approximately Rs.4.73 lacs and cumulative net losses are understated to the extent of approximately Rs 94.59 lacs.

4.1 Unreconciled Sub Ledger Balances

To overcome past deficiencies a new accounting software package was introduced in an earlier year on the basis of which accounts have been drawn. However, the aggregate of un- reconciled opening balances of various sub-ledgers with general ledger and subsequently other rectification entries/ unidentified balances requiring further analysis had been transferred to a separate account which at the end of the year is Rs.197.09 lacs debit and Rs. 363.66 lacs credit and the net balance of Rs. 166.57 lacs has been shown as a other long term liabilities.

5.1 Provision for Non Performing Assets

As per Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 assets and receivables are required to be classified as NPA and provision for non-performing assets as prescribed is required to be made. The provision for non-performing assets as per these Directions on , inter-corporate deposits , bills receivable, employees advances , share division customer account, others long term & advances required to be provided amounted to approx. Rs. 470.22 lacs. The provision for NPA till 31st March 2012 is Rs. Nil. To the extent of said provision of NPA Rs.470.22 lacs( approx) the cumulative net loss reflected is understated & assets are overstated.

5.2 Share Division Customer Account

During the year there were no transactions relating to sale/purchase of stocks/ investment in shares. In the absence of a complete reconciliation/confirmation of the share division customer account Rs. 164.96 Lacs has been shown as other loans & advances, the recoverability of which is uncertain. The Company has kept with for itself a few shares & securities as a security received from its customer against the recoverable amount of Rs 164.96 Lacs, which are under reconciliation & confirmation.

6.1 Provision for Non Performing Assets

As per Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 assets and receivables are required to be classified as NPA and provision for non-performing assets as prescribed is required to be made. The provision for non-performing assets as per these Directions on trade receivables required to be provided amounted to approx. Rs.2209.95 lacs (Net of Security received of Rs 601.93). However, provision of NPA of Rs.1,556.79 lacs has been made. To the extent of non-provision of NPA of Rs.653.16 lacs(approx), the cumulative net loss reflected is understated. & assets are overstated.

7.1 Inventory Valuation Method:-

(a) During the year there were no transactions relating to sale/purchase of stocks/ investment in shares. During the period ended 31st March, 2012, those shares which were held as bad deliveries have been removed from the schedule of stock in trade. The same will be shown when such shares/stock which are termed as bad deliveries are actually transferred in the name of company.

(b) The inventory of Securities is valued at Market value & Cost which ever is lower.

(c) For the untraded shares, value has been taken as Re.1/= per Company.

(d) For partly paid-up shares, Re.1 for untraded company has been taken.

(e) Bonus shares for which original shares not available is valued at Re. Zero per shares

7.2 Bank Balance of Rs. 2.79 lacs appearing in the books of accounts pertaining to 17 Banks were yet to be confirmed by the Banks as at 31st March, 2012. The same are anticipated to be confirmed by the said banks..

7.3 These are restricted bank balance and cannot be operated with out getting prior approval of Hon'ble Delhi High Court.

23. CONTINGENT LIABILITIES & OTHER COMMITMENTS

(a) Claims lodged and contingent liability arising out of suits and winding up petitions filed against the company not acknowledged as debts amounts to Rs. 868.18 lacs. There are also other cases filed in consumer and other courts against the company for which the company is contingently liable but for which the amount has not been ascertained.

(b) Punjab & Sind bank has filed a recovery suit before the Debt Recovery Tribunal (DRT) for recovery of Rs. 1217.52 lacs against which the amount payable to them, as per books is Rs. 803 40 lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs. 414.12 lacs has been made. Since the company has not made payment of interest & principal in accordance with the Fresh Restructuring Scheme filed with the Hon'ble High Court, Rs 1217.52 lacs became payable to PSB. No provision for the difference of Rs. 414.12 lacs has been made by the company.

(c) IndusInd Bank has filed a recovery suit before the Debt Recovery Tribunal (DRT), of Rs. 1042.42 lacs against which the amount payable to them as per books is Rs. 577.00 lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs. 465.42 lacs has been made.

(d) During the year ended 30th June, 2009, the company had received Rs. 100.00 lacs from one of its debtors and reduced the same amount from his recoverable balance. Subsequently the Hon'ble Punjab and Haryana Court deemed that payment to be an out of turn payment and asked the company to deposit the amount. The company had filed a SLP with the Hon'ble Supreme Court of India which has been dismissed by them. Therefore the company is liable to deposit the amount mentioned above which has yet to be deposited.

(e) During the preceding financial year ended 30th June, 2011 the company's tenant has filed a claim of Rs 100.00 lacs against the company due to damages suffered by the tenant which is pending arbitration before Mr. S.K. Tandon , Sole Arbitrator .

(f) There is a disputed a demand of Rs152.12 lakhs for payment of income tax under the Income Tax Act, 1961, which is disputed by the company and is pending before the appropriate authorities.

(g) There is an award passed by the arbitrator against the company in the matter of MS Shoes East Limited on May 28, 2012 for Rs. 51.28 lacs i.e. claim amount along with interest of Rs. 3.07 crores for an underwriting given by the company in the year 1995 for the public issue of M/s MS Shoes East Ltd. The same has been contested by Company before Hon'ble Delhi High Court .

8. RESTRUCTURING SCHEME

The management for a structured debt repayment had prepared two schemes of arrangement for reorganization of share capital of the company and for compromise with its secured and unsecured creditors. Both the schemes of arrangement envisage a viable, just & equitable settlement with its secured and unsecured creditors while simultaneously increasing the risk and stake of the promoters and their shareholding through fresh infusion of funds by the promoter company.

The company has also moved an application before the Hon'ble Company Law Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing a fresh repayment schedule to fixed depositors of the Company. The same repayment schedule has been included in the fresh restructuring scheme filed before the Hon'ble High Court of Delhi at New Delhi on 24th September 2004.

The implementation of the schemes is subject to the fulfillment of all the conditions of section 391 to section 394 of the Companies Act and approval/orders of the Hon'ble Delhi High Court. The Hon'ble Delhi High Court did not approve the company's first scheme filed in May 2000, though approved by the secured and unsecured creditors in their respective meetings convened pursuant to the orders of the Hon'ble Court, yet the Hon'ble Court did not accord sanction to the scheme on technical grounds. An application for review had been filed before the Hon'ble Delhi High Court on 30th May 2003, which is yet to be listed for hearing and which is hereinafter, wherever applicable, referred to as the "old scheme under review". The company intends not to pursue the review application filed for the old scheme under review before the Hon'ble Delhi High Court and it is proposed to be withdrawn at an appropriate stage of the proceedings for the sanction of "the fresh scheme".

The company has filed a fresh Scheme of Arrangement for the reorganization of the share capital of the company and for compromise with the secured and unsecured creditors of the company, hereinafter referred to as the "fresh scheme" before the Hon'ble Delhi High Court at New Delhi on 24th September 2004.

Pursuant to the orders of the Hon'ble Delhi High Court, the unsecured creditors and debenture holders in their meeting convened under the Chairpersonship of court appointed chairpersons (retired Judges of Hon'ble Delhi High Court) on 1st April 2005 and 2nd April, 2005 have approved the scheme without any modifications with the requisite majority. The meeting of the other secured creditors (banks/ institutions) was held on 17th September 2005 and has also approved the scheme by the requisite majority after considering some modifications proposed by the Punjab & Sind Bank.

The promoter company has undertaken, subject to sanction of the scheme by the Hon'ble Delhi High Court, to contribute to Rs. 19.50 crores of which Rs.15.60 crores were deposited with the Registrar of the Hon'ble Delhi High Court Registrar, as per court order by the promoter group, and the balance amount of Rs 3.90 crores has been deposited on 27th April, 2012.

The fresh scheme is conditional upon the following approvals and shall be deemed to be effective on obtaining the last of the approvals and the occurrence of the last of the following events: - i. Sanction of the scheme by the Hon'ble High Court of Delhi under Sections 391 and 394 of the

Act and other applicable provisions of the Act, Rules and Regulations, as the case may be;

ii. Filing of certified copies of the order of the Hon'ble High Court of Delhi with the Registrar of Companies (Delhi and Haryana).

The restructured debts of the company for each category of debt is on the basis of outstandings as envisaged in the fresh scheme filed in the year 2004 excluding interest not provided for and all liquidated damages/penal charges and interest on unpaid interest. The "Fresh Scheme of Arrangement" is drawn on the basis of acceptance of waiver of payment of past and future interest, penal charges, liquidated damages, and any other charges, costs and claims etc. except as provided and for values contained therein which is subject to the approval of the Hon'ble Delhi High Court.

The accounts of the company have been drawn on the assumption that the "fresh scheme" will be accepted and implemented. If it is not accepted and cannot be implemented for any reason the total liability before the proposed restructuring scheme including those for which no provision has been made and has been quantified under appropriate heads, shall become payable.

The fresh scheme is pending before the Hon'ble Delhi High Court as at 31st March, 2012 & there is no change in the status at the time of adoption of the financials for the period ended 31st March, 2012 by the Board of Directors.

9. DEPOSIT OF RS 19.50 CRORE BY DCM SERVICES LIMITED

DCM Services Ltd as a promoter has committed to bring in Rs 19.50 Cr as a promoter contribution upon sanction of their restructuring scheme u/s 391 of the Indian Companies Act, which is presently pending for sanction before the Hon'able Delhi High Court.

The Court vide order dated 06.05.2008 has asked DCM Services Limited to deposit Rs. 19.50 crores with the Court and pursuant to the court order, They have deposited (Rs 5.00 crores on 16.07.2010, Rs 6.70 crores on 18.11.2010, Rs. 3.90 crores on 21.04.2011 & Rs. 3.90 on 27.04.2012) aggregating to Rs. 19.50 crores on behalf of the promoters with the Registrar, Hon'ble Delhi High Court. No financial impact of this has been recorded in the financials of the company for the period ended 31st March, 2012.

10. INCOME TAX

(a) Deferred Tax Assets

In accordance with Accounting Standard-22 issued by The Institute of Chartered Accountants of India, deferred tax assets on accumulated depreciation and losses have not been accounted for since as per certain operational restrictions imposed, the company is unable to conduct any new business and therefore it is uncertain whether there will be sufficient future taxable income against which such deferred tax assets can be realized. Accordingly in view of absence of virtual certainty of sufficient taxable income in future no provision for deferred tax has been made.

(b) Tax Provision

The company has not made/retained any provision for income tax during the year since the company has substantial accumulated/ brought forward losses from earlier years.

11. EMPLOYEE BENEFITS

(a) Defined Contribution Plans:

The Company has recognized the contribution/liability in the profit & loss account for the financial year 2011-12.

12. GOING CONCERN BASIS

To comply with the directives of the Reserve Bank of India the company ceased to accept deposits from September 1997. Despite cessation of business, substantial accumulated losses, non-provision for full NPA's and interest payable, rejection of the "old scheme under review" and winding up petition filed by the Reserve Bank of India and various creditors of the company, the accounts of the company have been prepared on a "going concern" basis on an assumption & premises made by the management that (a) the fresh scheme would be approved by the Hon'ble Delhi High Court,

b) adequate finances and opportunities would be available in the foreseeable future to enable the company to start operating on a profitable basis,

(c) the promoters of the Company have provided letter of support, and

(d) injection of Rs. 19.50 crores as promoters quota.

13. BALANCE CONFIRMATION

(a) Balance confirmation of bills receivable and payable, advances recoverable in cash or in kind, receivables and payables relating to lease and hire purchase, lease security deposit of which party wise details are not available. Balance confirmation of inter-corporate deposits, balance of ex-employees, margin against L/C, loans from institutions, banks, and other receivables and payables have not been received from the parties/persons concerned. In the absence of balance confirmation the closing balances as per books of accounts have been incorporated in the final accounts and have been shown, unless otherwise stated by the management about its recoverability in the financials including considering the NPA Provisions, are good for recovery/payment. Time barred debts under the Limitations Act have not been separately ascertained and written off or provided for. In the absence of such confirmation & corresponding reconciliation, the financial impact cannot be ascertained.

(b) To overcome past deficiencies a new accounting software package was introduced in an earlier year on the basis of which accounts have been drawn. However, the aggregate of un- reconciled opening balances of various sub-ledgers the general ledger and subsequently other rectification entries, unidentified balances requiring further analysis had been transferred to a separate account which at the end of the year is Rs.197.09 lacs debit and Rs. 363.66 lacs credit and the net balance of Rs. 166.57 lacs has been shown as a current liability. These are subject to confirmation and reconciliation.

14. PAYMENT TO DIRECTORS

The company has paid Rs 2.87 Lacs remuneration to its Director during the period ended 31st March, 2012. Out of managerial remuneration of Rs 2.87 Lacs paid by the company, Rs 1.47 lacs pertain to period from July, 2011 to November, 2011. During the month of November, 2011, company has submitted an application to the Central Government seeking approval for re-appointment of whole time director and for approving the payment of Rs 5.40 lacs for the period of 1.12.2009 to 30.11.2011. Pending approval, the company has paid the remuneration to the director & has shown it as managerial remuneration in the financials.

The company has submitted another application with the Central Government seeking approval of payment of managerial remuneration of Rs. 3.99 lacs per annum for the period 1.12.2011 to 30.11.2014 dated on 29th March 2012 out of this Rs 1.40 Lacs pertain to the period from December, 2011 to March, 2012. The approval of the Central Government for the Directors remuneration is still pending as on 31st August 2012.

The amount of directors remuneration of Rs 8.27 Lacs payable to director of company are still pending for approval by Central Government as at 31st March 2012. The break-up of Rs 8.27 Lacs is as under :-

Rs. 1.86 Lacs for the period from December, 2009 to June, 2010 Rs. 3.54 Lacs for the period from July, 2010 to June, 2011 Rs. 2.87 Lacs for the period from July, 2011 to March, 2012

Pending approval, the company has paid the remuneration to the director & has shown it as managerial remuneration in the financials.

15. RELATED PARTY DISCLOSURE

As required by Accounting Standard - AS 18 "Related Party Disclosure" issued by The Institute of Chartered Accountants of India are as follows:

16. The company's application to RBI for certificate of registration (CoR) as a NBFC had been rejected by the RBI in the year 2004. The company had made an appeal to the Appellate Authority which directed the RBI to keep its order of rejection of CoR in abeyance for a period of six months during which the Company shall file a revised scheme for restructuring. RBI has preferred an appeal before the Hon'ble Delhi High Court against the order of the appellate authority, whichlis still pending.

17. MSME undertakings as defined in Micro, Small and Medium Development Act,2006 to whom Company owes NIL Previous year NIL.

18. PREVIOUS YEARS FIGURES

Company has changed its accounting from July-June to April-March. Considering this, its accounting year therefore the figures for the current year is for nine months only i.e. July' 11 to March' 12 and previous years figures have been regrouped and recast wherever necessary. However due to the difference in the length of the previous year & the current period the figure in the statement of profit & loss are not comparable.


Jun 30, 2011

1. RESTRUCTURING SCHEME

The management for a structured debt repayment had prepared two schemes of arrangement for reorganization of share capital of the company and for compromise with its secured and unsecured creditors. Both the schemes of arrangement envisage a viable, just & equitable settlement with its secured and unsecured creditors while simultaneously increasing the risk and stake of the promoters and their shareholding through fresh infusion of funds by the promoter company.

The Company has also moved an application before the Hon'ble Company Law Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing a fresh repayment schedule to fixed depositors of the Company. The same repayment schedule has been included in the fresh restructuring scheme filed before the Hon'ble High Court of Delhi at New Delhi on 24th September 2004.

The implementation of the schemes is subject to the fulfillment of all the conditions of section 391 to section 394 of the Companies Act and approval/orders of the Hon'ble Delhi High Court. The Hon'ble Delhi High Court did not approve the company's first scheme filed in May 2000, though approved by the secured and unsecured creditors in their respective meetings convened pursuant to the orders of the Hon'ble Court, yet the Hon'ble Court did not accord sanction to the scheme on technical grounds. An application for review had been filed before the Hon'ble Delhi High Court on 30th May 2003, which is yet to be listed for hearing and which is hereinafter, wherever applicable, referred to as the "old scheme under review". The company intends not to pursue the review application filed for the old scheme under review before the Hon'ble Delhi High Court and it is proposed to be withdrawn at an appropriate stage of the proceedings for the sanction of "the fresh scheme".

The company has filed a fresh Scheme of Arrangement for the reorganization of the Share Capital of the Company and for compromise with the Secured and Unsecured Creditors of the company, hereinafter referred to as the "fresh scheme" before the Hon'ble Delhi High Court at New Delhi on 24th September 2004.

Pursuant to the orders of the Hon'ble High Court, the unsecured creditors and Debenture holders in their meeting convened under the Chairpersonship of court appointed chairpersons (retired Judges of Hon'ble Delhi High Court) on 1st April 2005 and 2nd April, 2005 have approved the scheme without any modifications with the requisite majority. The meeting of the other Secured creditors (Banks/ Institutions) was held on 17th September 2005 and has also approved the scheme by the requisite majority after considering some modifications proposed by the Punjab & Sind Bank.

The promoter company has undertaken subject to sanction of the scheme by the Hon'ble Delhi High Court to contribute to Rs. 19.50 Crores of which Rs.15.60 crores was deposited with the Hon'ble High Court Registrar, as per Court order by promoter group.

The fresh scheme is conditional upon the following approvals and shall be deemed to be effective on obtaining the last of the approvals and the occurrence of the last of the following events: -

i. Sanction of the Scheme by the Hon'ble High Court of Delhi under Sections 391 and 394 of the Act and other applicable provisions of the Act, Rules and Regulations, as the case may be;

ii. Filing of certified copies of the order of the Hon'ble High Court of Delhi with the Registrar of Companies (Delhi and Haryana).

The restructured debts of the company for each category of debt is on the basis of out standings as envisaged in the fresh scheme filed in the year 2004 excluding interest not provided for and all liquidated damages/penal charges and interest on unpaid interest. The "Fresh Scheme of Arrangement" is drawn on the basis of acceptance of waiver of payment of past and future interest, penal charges, liquidated damages, and any other charges, costs and claims etc. except as provided and for values contained therein which is subject to the approval of the Hon'ble Delhi High Court.

The accounts of the company have been drawn on the assumption that the "fresh scheme" will be accepted and implemented. If it is not accepted and cannot be implemented for any reason the total liability before the proposed restructuring scheme including those for which no provision has been made and has been quantified under appropriate heads, shall become payable.

The fresh scheme is pending before the Hon'ble Delhi High Court as at 30th June, 2011 & there is no change in the status at the time of adoption of the financials for the period ended 30th June, 2011 by the Board of Directors.

2. DEPOSIT OF RS 15.60 CRORE BY DCM SERVICES LIMITED

DCM Services Ltd as a promoter has committed to bring in Rs 19.50 Cr as a promoter contribution upon sanction of their restructuring scheme u/s 391 of the Indian Companies Act, which is presently pending for sanction before the Hon'able Delhi High Court.

The Court vide order dated 15.2.2010 has asked the promoters to deposit Rs 15.60 Crore with the court with a condition that in case the scheme is not approved due to any reason the amount will be given back to the promoters .

Pursuant to the court order, DCM Services Limited has deposited Rs 5.00 Cr on 16.07.2010, Rs 6.70 Cr on 18.11.2010 & Rs. 3.90 Cr. on 21.04.2011 with the Registrar, Delhi High Court. No financial impact of same has been recorded in the financials of the Company during the year ended 30th June, 2011.

3. SHARE APPLICATION MONEY

As per consent letters received, expenditure incurred/repayment made by the company amounting to Rs. 549.72 lacs funded by the group companies till June.2007, have been credited to the Share Application account.

4. CAPITAL RESERVES

Rs. 193.87 lacs in the capital reserve account consists of surpluses realized from settlement with the debentures and other liabilities not payable, which in the opinion of the management have been transferred to Capital Reserve since these amounts do not relate to trading activities.

5. DEBENTURES

a) The value of assets charged in favour of debentures has been depleted over a period of time but the depletion has not been ascertained. To the extent of shortfall, if any, the liability is unsecured.

b) A supplementary trust deed for giving effect to the proposed repayment plans as provided in clause 44 of the Trust deed has not been prepared by the trustees so far.

c) Provision of interest on debentures up to June 30, 2011 calculated @ 10% p.a. of simple interest as per renewal offer letter of 1998 on 19.5% Debenture "B" Series and regular interest on Debenture "A" Series amounting to approximately Rs. 3,353.86 lacs has not been provided since a fresh restructuring scheme that is subject to the approval of the Hon'ble High Court of Delhi has been submitted which does not envisage payment of any interest. To the extent of the non-provision of interest calculated as per renewal offer letter of 1998, the current year profits are overstated to the extent of Rs. 255.78 lacs. And cumulative net losses are understated to the extent of Rs. 3,353.86 lacs. The difference between the original contracted interest @ 19.5% and as per offer letter @ 10% has also not been ascertained and provided for pending approval of the fresh scheme. To the extent of interest not provided cumulative net loss is understated.

d) Debenture Redemption Reserve for series 'B' has not been created during the year in view of the carry forward losses suffered by the company in the past.

e) The Central Bank of India, Mumbai, Trustees for the Non-Convertible Debentures B- Series have filed a suit for recovery of Rs. 4,423.86 lacs on 14th October, 1999 before the Hon'ble Mumbai High Court. As against the claim of Rs. 4,423.86 lakhs by The Central Bank of India, Mumbai, Trustees for The Non-Convertible Debentures "B" Series, Rs. 2548.75 lacs on account of principal and interest is reflected in the books as on date. In view of the fresh scheme seeking waiver of interest payable to debenture holders, no provision has been made for the difference between the claim made by the Central Bank of India and the liability as per the books to this extent the cumulative net losses of Rs. 1,875.11 lacs. is understated.

The Hon'ble Mumbai High Court vide its interim order dated 24th December, 1999 has passed an order that all receipts from hypothecated assets shall be deposited with the trustees in a separate bank account except for amounts utilized as per orders of The Reserve Bank of India and the Company Law Board.

The suits filed by the Central Bank of India before the Hon'ble Mumbai High Court has been stayed by Hon'ble High Court of Delhi vide order dated 14 September 2005 on application made by the company and there is no change in the status as at 30th June, 2011.

6. LOANS FROM INSTITUTIONS/ BANKS

(A) SBI HOME FINANCE LTD.(SBIHF): -

The company has already paid Rs. 2.90 crores under the old scheme and proposes to allot shares worth Rs. 25 lakhs for the balance as per the fresh scheme in the first year from the effective date (Effective date means the date of filling of the certified copy of the order sanctioning the scheme of the Honorable High Court of Delhi at New Delhi with the Registrar of Companies of Delhi & Haryana). SBIHF has removed a charge on its assets and therefore the loan is now categorized as unsecured loan.

(B) SIDBI: The amounts due has been quantified at Rs. 45.38 lacs as per the "old scheme under review". However, under the fresh scheme the interest payable amounting to Rs. 9.08 lacs is sought to be waived and has already been written back in the earlier year. The principal amount due as on 30th June, 2004 amounting to Rs. 36.30 lacs is proposed to be repaid in 3 equal installments of Rs. 12.10 lacs from the 2nd year of the effective date.

SIDBI has filed a petition for winding up on alleged non-payment of Rs. 54.40 lacs before the Hon'ble Delhi High Court on which stay has been granted by the Hon'ble Delhi High Court. Provision for liability on account of interest, overdue interest, and other charges claimed and claimable by SIDBI has not been ascertained and provided for due to waiver of interest sought under the "fresh scheme".

(C) PUNJAB & SIND BANK (PSB): As per the fresh scheme the total amount payable to PSB remains quantified at Rs. 901.80 lakhs as on 30th June 2004. (After providing interest @10% p.a., compounded quarterly from 30th September 1999 till 31st March, 2000 on the principal debt as on 30.09.1997. Out of this 60% of Rs.901.80 lacs i.e. Rs.541.08 lacs. shall be payable in 6 equal yearly installments after one year from the date of approval of the scheme on or 1st April,2006 whichever is earlier. The balance 40% shall be discharged by issuing equity shares at any time within 3 years of the effective date or 1st April, 2006 which ever is earlier. The company has till date paid/ adjusted Rs. 98.40 lacs and the balance of Rs. 803.40 lacs as on 30th June 2008 is payable as per the fresh scheme pending before the Hon'ble Delhi High Court. Pursuant to an earlier agreement with the bank, from April 1, 2000 till 31st March 2005, interest at a compounded half yearly rate of 10% p.a. has been computed at Rs. 395.97 lakhs, which has already been paid by way of allotment of equity shares of Rs. 10/- each at a premium of Rs. 20/- on 31st March 2001. In the event of default in the payment of interest and principal, the concessions made by PSB shall stand withdrawn and their claim settled before the Debt Recovery Tribunal of Rs. 1217.52 lakhs will become payable with immediate effect. Interest payable from 01.04.2005 to 30.06.2011 is also not provided since a fresh restructuring scheme, which is subject to the approval of Hon'ble High Court of Delhi, has been submitted which does not envisage payment of any interest. In view of the claim of Rs 1217.52 filed before the Debt Recovery Tribunal and to the extent of interest, overdue interest, default charges not provided, net profit for the year is overstated and cumulative net loss is understated to that extent.

(D) INDUSIND BANK: The amount payable to Indus land Bank after calculating interest up to March 31, 2000 had been quantified at Rs. 916.64 lakhs in accordance with the "old scheme under review". The company has till date paid/adjusted Rs. 339.64 lakhs and the balance of Rs.577.00 lacs as on 30th June 2008 is also payable as per the fresh scheme. Pursuant to an earlier agreement with the bank, from April 1, 2000 till 31st March 2005, interest at a compounded half yearly rate of 10% p.a. has been computed at Rs. 300.20 lakhs, which has already been paid by way of allotment of equity shares of Rs. 10/- each at a premium of Rs. 20/- on 31st March 2001. In the event that the company fails to pay the interest or principal, the concessions made by Indus land Bank will be withdrawn and the amount claimed in the Debt Recovery Tribunal amounting to Rs. 1042.42 lakhs would be payable with immediate effect. Interest payable from 01.04.2005 to 30.06.2011 is also not provided since a fresh restructuring scheme, which is subject to the approval of Hon'ble High Court of Delhi, has been submitted which does not envisage payment of any interest. The net profit for the year is overstated and cumulative net loss is understated to that extent.

(E) VALUE OF SECURITY AGAINST SECURED LOANS FROM BANKS/ INSTITUTIONS:

The value of the assets charged in favour of banks and institutions have depleted over a period of time and the depletion has not been ascertained. To the extent of the shortfall, if any, the liability is unsecured.

7. FIXED DEPOSITS ACCEPTED

a) In respect of repayment of outstanding deposits with interest vide order dated 17.07.98, the Company Law Board had ordered payment of interest at contracted rates up to the date of maturity and at 10% thereafter. Due to liquidity problem, the company has not fully followed the schedule of repayment ordered by the Company Law Board. However, a fresh scheme of arrangement for re-organization of the share capital of the company and for compromise with its creditors including fixed depositors has been made in which interest dues will be waived and accordingly provision of interest payable amounting to Rs. 827.06 lacs has been written back in earlier years.

b) The Company has also moved an application before the Hon'ble Company Law Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing a fresh repayment schedule to fixed depositors of the Company before the fresh scheme is filed before the Hon'ble Delhi High Court.

c) Fixed deposits and bills payable as per information retained on the computer is Rs.5648.70 lacs whereas fixed deposits, which also includes bills payable, as per books, amounts to Rs.5638.00 lacs and the difference of Rs. 10.70 lacs is un-reconciled. The company, in accordance with a subsequently confirmed order of the Hon'ble Company Law Board dated July 17, 1998 had given an option to the creditors of overdue bills rediscounted to convert their dues into fixed deposits on due dates retrospectively. Bills rediscounted, including those converted into fixed deposits, have been reflected under fixed deposits.

d) Liability on account of Fixed Deposits received contain certain deposits which appear prima-facie to be suspect due to either lack of identification of depositors or no claim or confirmation having been received by the company.

Payment of those deposits that are under a suspicious category will be made under the proposed scheme of arrangement only after the evidence of receipt of money is established.

e) Provision for interest on fixed deposit up to June 30, 2011 calculated at simple interest @ 10% p.a. in accordance with the order of The Hon'ble Company Law Board amounting to approx. Rs.8,297.92 lacs (including approximately Rs. 7,732.88 lacs for the earlier years) has not been made in view of the "fresh scheme" pending before the Hon'ble Delhi High Court wherein the company does not envisage payment of any interest. To the extent of non-provision of interest @10% as per the previous CLB order, the current year profits are overstated to the extent of approximately Rs.565.04 lacs and cumulative net losses are understated to the extent of approximately Rs.8,297.92 lacs. The difference between the contracted rate of interest and rate of interest @ 10% has also not been ascertained and provided for.

f) Due to a liquidity crises in the past the minimum liquid assets @15% of fixed deposits as per RBI directives has not been maintained by the company. The company has applied to the Reserve Bank of India and the Company Law Board for exemption from maintaining minimum liquid assets and payment of penal interest but the disposal of the application is still pending.

8. INTER - CORPORATE DEPOSITS

Provision for interest on inter corporate deposits up to June 30, 2011 amounting to approximately Rs.89.86 lacs which includes approximately Rs.83.54 lacs for the earlier years, has not been made in view of the "fresh scheme" pending before the Hon'ble High Court of Delhi wherein the company does not envisage payment of any interest. To the extent of non-provision of interest, the current year's profits are overstated to the extent of approximately Rs.6.32 lacs and cumulative net losses are understated to the extent of approximately Rs 89.86 lacs.

9. NON-PROVISION ON NON-PERFORMING ASSETS AS PER RBI NORMS

As per Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 assets and receivables are required to be classified as NPA and provision for non- performing assets as prescribed is required to be made. The provision for non- performing assets as per these Directions on hire purchase and lease receivables, inter- corporate deposits given, bills receivable, advances recoverable in cash or in kind and other receivables required to be provided amounted to approx. Rs.2685.99 lacs (Net of Security received of Rs 601.93) but only provision of Rs.1,556.79 lacs has been made. To the extent of non-provision of approximately Rs.1129.20 lacs the cumulative net loss reflected is understated.

Current assets, loans & advances other than mentioned above are good for recovery..

10. INCOME TAX

(a) Deferred Tax Assets

In accordance with Accounting Standard-22 issued by The Institute of Chartered Accountants of India, Deferred tax assets on accumulated depreciation and losses has not been accounted for since as per certain operational restrictions imposed, the Company is unable to conduct any new business and therefore it is uncertain whether there will be sufficient future taxable income against which such deferred tax assets can be realized. Accordingly in view of absence of virtual certainty of sufficient taxable income, no provision for deferred tax has been made.

(b) Tax Provision

The Company has not made/retained any provision for income tax during the year since the company has substantial accumulated brought forward losses from the earlier years.

11. INVESTMENTS/SECURITIES HELD AS STOCK-IN-TRADE

During the year there were no transactions relating to sale/purchase of stocks/ investment in shares. In the absence of a complete reconciliation/confirmation of the share division customer account Rs. 164.96 Lacs has been shown as current assets, the recoverability of which is uncertain. During the year ended 30th June 2011, those shares which were held as bad deliveries have been removed from the schedule of stock in trade. The same will be shown when such shares/stock which are termed as bad deliveries are actually transferred in the name of company. The Company has kept with itself few shares & securities as a security received from its customer against the recoverable amount of Rs 164.96 Lacs, which are under reconciliation & confirmation.

12. EMPLOYEE BENEFITS

(a) Defined Contribution Plans:

The Company has recognized the contribution/liability in the Profit & Loss Account for the financial year 2010-11.

(b) Defined Benefit Plans & Other Long Term Benefits:

The following disclosures are made in accordance with AS 15 (Revised) pertaining to Defined Benefit Plans and Other Long Term Benefits:

Notes:

(a) The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotion and other relevant factors;

(b) The liability towards gratuity & the earned leave for the year ended 30th June, 2011, based on actuarial valuation amounting to Rs 1.04 lacs. & Rs. 0.03 lacs. have been recognized in the profit & loss account.

13. GOING CONCERN BASIS

To comply with the directives of the Reserve Bank of India the company ceased to accept deposits from September 1997. Despite cessation of business, substantial accumulated losses, non-provision for full NPA's and interest payable, rejection of the "old scheme under review" and winding up petition filed by the Reserve Bank of India and various creditors of the company, the accounts of the company have been prepared on a "going concern" basis on an assumption & premises made by the management that (a) fresh scheme would be approved by Hon'ble Delhi High Court, b adequate finances and opportunities would be available in the foreseeable future to enable the company to start operating on a profitable basis and (c) the promoters of the Company have provided letter of support.

14. BALANCE CONFIRMATION

(a) Balance confirmation of bills receivable and payable, advances recoverable in cash or in kind, receivables and payables relating to lease and hire purchase, lease security deposit of which party wise details are not available. Balance confirmation of inter-corporate deposits, balance of ex-employees, margin against L/C, loans from institutions, banks, and other receivables and payables have not been received from the parties/persons concerned. In the absence of balance confirmation the closing balances as per books of accounts have been incorporated in the final accounts and have been shown, unless otherwise stated by the management, as good for recovery/payment. Time barred debts under the Limitations Act have not been separately ascertained and written off or provided for. In the absence of such confirmation & corresponding reconciliation, the financial impact cannot be ascertained.

(b) To overcome past deficiencies a new accounting software package was introduced in an earlier year on the basis of which accounts have been drawn. However, the aggregate of un- reconciled opening balances of various sub-ledgers with general ledger and subsequently other rectification entries/ unidentified balances requiring further analysis had been transferred to a separate account which at the end of the year is Rs.197.09 lacs debit and Rs. 363.66 lacs credit and the net balance of Rs. 166.57 lacs has been shown as a current liability.

(c) Bank Balance of Rs. 1.26 lacs appearing in the books from 10 Banks were yet to be confirmed by the Banks as at 30th June, 2011.

The Company has paid Rs 3.54 Lacs remuneration to its Director during the year ended 30th June, 2011.Company has got the approval of Central Government for the payment of Director's Remuneration under Section 309 of the Companies Act, 1956, which was effective and valid up to 30th November 2009. Out of managerial remuneration of Rs 3.52 Lacs paid by the company, Rs 1.66 Lacs pertain to till November, 2009. During the month of November, 2011, Company has submitted an application with Central Government seeking approval for re-appointment of Whole Time Director and for approving the payment of managerial remuneration of Rs 1.86 for the year 2009-2010 & Rs 3.54 for the year 2010-2011. Pending approval, Company has paid the remuneration to director & the same has been shown as managerial remuneration in financials.

15. RELATED PARTY DISCLOSURE

As required by Accounting Standard - AS 18 "Related Party Disclosure" issued by The Institute of Chartered Accountants of India are as follows:

16. CONTINGENT LIABILITIES

(a) Claims lodged and contingent liability arising out of suits and winding up petitions filed against the company not acknowledged as debts amounts to Rs. 868.18 lacs. There are also other cases filed in consumer and other courts against the company for which the company is contingently liable but for which the amount has not been ascertained.

(b) Punjab & Sind bank has filed a recovery suit before the Debt Recovery Tribunal (DRT) for recovery of Rs. 1217.52 lacs against which the amount payable to them, as per books is Rs. 803.40 lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs. 414.12 lacs has been made. Since the Company has not made payment of interest & principal in accordance with the Fresh Restructuring Scheme filed with the Hon'ble High Court, Rs 1217.52 became payable to PSB. No provision for the difference of Rs. 414.12 lacs has been made by the Company.

(c) Indus land Bank has filed a recovery suit before the Debt Recovery Tribunal (DRT), of Rs. 1042.42 lacs against which the amount payable to them as per books is Rs. 577.00 lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs. 465.42 lacs has been made.

(d) During the year ended 30th June, 2009, the Company had received Rs. 100.00 lacs from one of the Debtors and reduced the balance recoverable from the debtors account. Subsequently the Hon'ble Punjab and Haryana Court deemed that payment to be an out of turn payment and asked the company to deposit the amount. The Company had filed a SLP with the Hon'ble Supreme Court of India which has been dismissed by them. The Company is liable to deposit the amount mentioned above which has yet to be deposited.

(e) During the preceding financial year ended 30th June, 2011 the company's tenant has filed a claim of Rs 100.00 lacs against the company due to damages suffered by the tenant.

(f) There is a disputed statutory due that have not been deposited on account of matters pending before appropriate authorities a demand of Rs.152.12 Lakh for payment of income tax under the Income tax Act, 1961.

17. Company application to RBI for certificate of registration (CoR) as a NBFC had been rejected by the RBI. The company had made an appeal to the Appellate Authority which directed the RBI to keep its order of rejection of CoR in abeyance for a period of six months during which the Company shall file a revised scheme for restructuring. RBI has preferred an appeal before Hon'ble Delhi High Court against the order of the Appellate Authority, which is still pending.

18. PREVIOUS YEARS FIGURES

Previous years figures have been regrouped and recast wherever necessary to make them comparable with the figures for the current year.

Notes:

1) As defined in paragraph 2(1) (xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions , 1998.

2) Provisioning norms shall be applicable as prescribed in the Non - Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

3) All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of Debt. However , market value in respect of quoted investments and break up/fair value/ NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in (5) above.


Jun 30, 2010

1. RESTRUCTURING SCHEME

The management for a structured debt repayment had prepared two schemes of arrangement for reorganization of share capital of the company and for compromise with its secured and unsecured creditors. Both the schemes of arrangement envisage a viable, just & equitable settlement with its secured and unsecured creditors while simultaneously increasing the risk and stake of the promoters and their shareholding through fresh infusion of funds by the promoter company.

The Company has also moved an application before the Honble Company Law Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing a fresh repayment schedule to fixed depositors of the Company. The same repayment schedule has been included in the fresh restructuring scheme filed before the Honble High Court of Delhi at New Delhi on 24th September 2004.

The implementation of the schemes is subject to the fulfillment of all the conditions of section 391 to section 394 of the Companies Act and approval/orders of the Honble Delhi High Court. The Honble Delhi High Court did not approve the companys first scheme filed in May 2000, though approved by the secured and unsecured creditors in their respective meetings convened pursuant to the orders of the Honble Court, yet the Honble Court did not accord sanction to the scheme on technical grounds. An application for review had been filed before the Honble Delhi High Court on 30th May 2003, which is yet to be listed for hearing and which is hereinafter, wherever applicable, referred to as the "old scheme under review". The company intends not to pursue the review application filed for the old scheme under review before the Honble Delhi High Court and it is proposed to be withdrawn at an appropriate stage of the proceedings for the sanction of "the fresh scheme".

The company has filed a fresh Scheme of Arrangement for the reorganization of the Share Capital of the Company and for compromise with the Secured and Unsecured Creditors of the company, hereinafter referred to as the "fresh scheme" before the Honble Delhi High Court at New Delhi on 24" September 2004.

Pursuant to the orders of the Honble High Court, the Unsecured creditors and Debenture holders in their meeting convened under the Chairpersonship of court appointed chairpersons (retired Judges of Honble Delhi High Court) on 1st April 2005 and 2nd April, 2005 have approved the scheme without any modifications with the requisite majority. The meeting of the other Secured creditors (Banks/ Institutions) was held on 17th September 2005 and has also approved the scheme by the requisite majority after considering some modifications proposed by the Punjab & Sind Bank.

The promoter company has undertaken subject to sanction of the scheme by the Honble Delhi High Court to contribute to Rs. 19.50 Crores of which Rs.11.70 crores was deposited with the Honble High Court Registrar, as per Court order by promoter group.

The fresh scheme is conditional upon the following approvals and shall be deemed to be effective on obtaining the last of the approvals and the occurrence of the last of the following events:-

i. Sanction of the Scheme by the Honble High Court of Delhi under Sections 391 and 394 of the Act and other applicable provisions of the Act, Rules and Regulations, as the case may be;

ii. Filing of certified copies of the order of the Honble High Court of Delhi with the Registrar of Companies (Delhi and Haryana).

The restructured debts of the company for each category of debt is on the basis of out standings as envisaged in the fresh scheme filed in the year 2004 excluding interest not provided for and all liquidated damages/penal charges and interest on unpaid interest. The "Fresh Scheme of Arrangement" is drawn on the basis of acceptance of waiver of payment of past and future interest, penal charges, liquidated damages, and any other charges, costs and claims etc. except as provided and for values contained therein which is subject to the approval of the Honble Delhi High Court.

The accounts of the company have been drawn on the assumption that the "fresh scheme" will be accepted and implemented. If it is not accepted and cannot be implemented for any reason the total liability before the proposed restructuring scheme including those for which no provision has been made and has been quantified under appropriate heads, shall become payable.

The fresh scheme is pending before the Honble Delhi High Court as at 30th June, 2010 & there is no change in the status at the time of adoption of the financials for the period ended 30th June, 2010 by the Board of Directors.

2. DEPOSIT OF RS 11,7 CRORE BY PCM SERVICES LIMITED

DCM Services Ltd as a promoter has committed to bring in Rs 19.5 Cr as a promoter contribution upon sanction of their restructuring scheme u/s 391 of the Indian Companies Act, which is presently pending for sanction before the Honable Delhi High Court.

The Court vide order dated 15.2.2010 has asked the promoters to deposit Rs 11.7 Crore with the court with a condition that in case the scheme is not approved due to any reason the amount will be given back to the promoters.

Pursuant to the court order, DCM Services Limited has deposited Rs 5.00 Cr on 16.07.2010and Rs 6.7 Cr on 18.11.2010 with the Registrar, Delhi High Court. No financial impact of same has been recorded in the financials of the Company during the year ended 30th June, 2010.

3. SHARE APPLICATION MONEY

As per consent letters received, expenditure incurred/repayment made by the company amounting to Rs. 549.72 lacs funded by the group companies till June.2007, have been credited to the Share Application account.

4. CAPITAL RESERVES

Rs. 193.87 lacs in the capital reserve account consists of surpluses realized from settlement with the debentures and other liabilities not payable, which in the opinion of the management have been transferred to Capital Reserve since these amounts do not relate to trading activities.

5. DEBENTURES

a) The value of assets charged in favour of debentures have been depleted over a period of time but the depletion has not been ascertained. To the extent of shortfall, if any, the liability is unsecured.

b) A supplementary trust deed for giving effect to the proposed repayment plans as provided in clause 44 of the Trust deed has not been prepared by the trustees so far.

c) Overdue interest up to June 30, 2010 calculated @ 10% p.a. of simple interest as per renewal offer letter of 1998 on 19.5% Debenture "B" Series and regular interest on Debenture "A" Series amounting to approximately Rs. 3,098.08 lacs has not been provided since a fresh restructuring scheme that is subject to the approval of the Honble High Court of Delhi has been submitted which does not envisage payment of any interest. To the extent of the non-provision of interest calculated as per renewal offer letter of 1998, the current year profits are overstated to the extent of Rs. 255.85 lacs, and cumulative net losses are understated to the extent of Rs. 3098.08 lacs. The difference between the original contracted interest @ 19.5% and as per offer letter @ 10% has also not been ascertained and provided for pending approval of the fresh scheme. To the extent of interest not provided cumulative net loss is understated.

d) Debenture Redemption Reserve for series "B" has not been created during the year in view of the carry forward losses suffered by the company in the past.

e) The Central Bank of India, Mumbai, Trustees for the Non-Convertible Debentures B- Series have filed a suit for recovery of Rs. 4,423.86 lacs on 14th October,1999 before the Honble Mumbai High Court. As against the claim of Rs. 4,423.86 lakhs by The Central Bank of India, Mumbai, Trustees for The Non-Convertible Debentures "B" Series, Rs. 2,549.99 lacs on account of principal and interest is reflected in the books as on date. In view of the fresh scheme seeking waiver of interest payable to debenture holders, no provision has been made for the difference between the claim made by the Central Bank of India and the liability as per the books to this extent the cumulative net losses of Rs. 1,873.87 lacs, is understated. The Honble Mumbai High Court vide its interim order dated 24th December, 1999 has passed an order that all receipts from hypothecated assets shall be deposited with the trustees in a separate bank account except for amounts utilized as per orders of The Reserve Bank of India and the Company Law Board.

The suits filed by the Central Bank of India before the Honble Mumbai High Court has been stayed by Honble High Court of Delhi vide order dated 14 September 2005 on application made by the company and there is no change in the status as at 30th June, 2010.

6. LOANS FROM INSTITUTIONS/ BANKS

(A) SBI Home Finance Ltd.(SBIHF): -

The company has already paid Rs. 2.90 crores underthe old scheme and proposes to allot shares worth Rs. 25 lakhs for the balance as per the fresh scheme in the first year from the effective date (Effective date means the date of filling of the certified copy of the order sanctioning the scheme of the Honorable High Court of Delhi at New Delhi with the Registrar of Companies of Delhi & Haryana). SBIHF has removed a charge on its assets and therefore the loan is now categorized as unsecured loan.

(B) SIDBI: The amounts due has been quantified at Rs. 45.38 lacs as per the "old scheme under review". However, under the fresh scheme the interest payable amounting to Rs. 9.08 lacs is sought to be waived and has already been written back in the earlier year. The principal amount due as on 30th June, 2004 amounting to Rs. 36.30 lacs is proposed to be repaid in 3 equal installments of Rs. 12.10 lacs from the 2™1 yearof the effective date.

SIDBI has filed a petition for winding up on alleged non-payment of Rs. 54.40 lacs before the Honble Delhi High Court on which stay has been granted by the Honble Delhi High Court. Provision for liability on account of interest, overdue interest, and other charges claimed and claimable by SIDBI has not been ascertained and provided for due to waiver of interest sought under the "fresh scheme".

(C) PUNJAB & SIND BANK (PSB): As per the fresh scheme the total amount payable to PSB remains quantified at Rs. 901.80 lakhs as on 30th June 2004. (After providing interest @10% p.a., compounded quarterly from 30th September 1999 till 31st March, 2000 on the principal debt as on 30.09.1997. Out of this 60% of Rs.901.80 lacs i.e. Rs.541.08 lacs, shall be payable in 6 equal yearly installments after one year from the date of approval of the scheme on or 1" April,2006 whichever is earlier. The balance 40% shall be discharged by issuing equity shares at any time within 3 years of the effective date or 1" April,2006 which ever is earlier. The company has till date paid/ adjusted Rs. 98.40 lacs and the balance of Rs. 803.40 lacs as on 30" June 2008 is payable as per the fresh scheme pending before the Honble Delhi High Court. Pursuant to an earlier agreement with the bank, from April 1, 2000 till 31st March 2005, interest at a compounded half yearly rate of 10% p.a. has been computed at Rs. 395.97 lakhs, which has already been paid by way of allotment of equity shares of Rs. 10/- each at a premium of Rs. 20/- on 31st March 2001. In the event of default in the payment of interest and principal, the concessions made by PSB shall stand withdrawn and their claim settled before the Debt Recovery Tribunal of Rs. 1217.52 lakhs will become payable with immediate effect. Interest payable from 01.04.2005 to 30.06.2010 is also not provided since a fresh restructuring scheme, which is subject to the approval of Honble High Court of Delhi, has been submitted which does not envisage payment of any interest. In view of the claim of Rs 1217.52 filed before the Debt Recovery Tribunal and to the extent of interest, overdue interest., default charges not provided, net profit for the year is overstated and cumulative net loss is understated to that extent.

(D) Indusind Bank: The amount payable to Indusind Bank after calculating interest up to March 31, 2000 had been quantified at Rs. 916.64 lakhs in accordance with the "old scheme under review". The company has till date paid/adjusted Rs. 339.64 lakhs and the balance of Rs.577.00 lacs as on 30th June 2008 is also payable as per the fresh scheme. Pursuant to an earlier agreement with the bank, from April 1, 2000 till 31sMarch 2005, interest at a compounded half yearly rate of 10% p.a. has been computed at Rs. 300.20 lakhs, which has already been paid by way of allotment of equity shares of Rs. 10/- each at a premium of Rs. 20/-on 31st March 2001. In the event that the company fails to pay the interest or principal, the concessions made by Indusind Bank will be withdrawn and the amount claimed in the Debt Recovery Tribunal amounting to Rs. 1042.42 lakhs would be payable with immediate effect. Interest payable from 01.04.2005 to 30.06.2010 is also not provided since a fresh restructuring scheme, which is subject to the approval of Honble High Court of Delhi, has been submitted which does not envisage payment of any interest. The net profit for the year is overstated and cumulative net loss is understated to that extent.

(E) VALUE OF SECURITY AGAINST SECURED LOANS FROM BANKS/ INSTITUTIONS:

The value of the assets charged in favour of banks and institutions have depleted over a period of time and the depletion has not been ascertained. To the extent of the shortfall, if any, the liability is unsecured.

7. FIXED DEPOSITSACCEPTED

a) In respect of repayment of outstanding deposits with interest vide order dated 17.07.98, the Company Law Board had ordered payment of interest at contracted rates up to the date of maturity and at 10% thereafter. Due to liquidity problem, the company has not fully followed the schedule of repayment ordered by the Company Law Board. However, a fresh scheme of arrangement for re-organization of the share capital of the company and for compromise with its creditors including fixed depositors has been made in which interest dues will be waived and accordingly provision of interest payable amounting to Rs. 827.06 lacs has been written back in earlier years.

b) The Company has also moved an application before the Honble Company Law Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company Law Regulations 1991 proposing a fresh repayment schedule to fixed depositors of the Company before the fresh scheme is filed before the Honble Delhi High Court.

c) Fixed deposits and bills payable as per information retained on the computer is Rs.5653.06 lacs whereas fixed deposits, which also includes bills payable, as per books, amounts to Rs.5642.36 lacs and the difference of Rs. 10.70 lacs is un- reconciled. The company, in accordance with a subsequently confirmed order of the Honble Company Law Board dated July 17,1998 had given an option to the creditors of overdue bills rediscounted to convert their dues into fixed deposits on due dates retrospectively. Bills rediscounted, including those converted into fixed deposits, have been reflected underfixed deposits.

d) Liability on account of Fixed Deposits received contain certain deposits which appear prima-facie to be suspect due to either lack of identification of depositors or no claim or confirmation having been received by the company.

Payment of those deposits that are under a suspicious category will be made under the proposed scheme of arrangement only after the evidence of receipt of money is established.

e) Provision for interest upto June 30, 2010 calculated at simple interest @ 10% p.a. in accordance with the order of The Honble Company Law Board amounting to approx. Rs.7,732.88 lacs (including approximately Rs. 7,167.57 lacs for the earlier years) has not been made in view of the "fresh scheme" pending before the Honble Delhi High Court wherein the company does not envisage payment of any interest. To the extent of non-provision of interest @10% as per the previous CLB order, the current year profits are overstated to the extent of approximately Rs.565.31 lacs and cumulative net losses are understated to the extent of approximately Rs.7,732.88 lacs The difference between the contracted rate of interest and rate of interest @ 10% has also not been ascertained and provided for.

f) Due to a liquidity crises in the past the minimum liquid assets @15% of fixed

deposits as per RBI directives has not been maintained by the company. The company has applied to the Reserve Bank of India and the Company Law Board for exemption from maintaining minimum liquid assets and payment of penal interest but the disposal of the application is still pending.

8. INTER -CORPORATE DEPOSITS

Provision for interest upto June 30, 2010 amounting to approximately Rs.83.54 lacs which includes approximately Rs.77.22 lacs for the earlier years, has not been made in view of the "fresh scheme" pending before the Honble High Court of Delhi wherein the company does not envisage payment of any interest. To the extent of non-provision of interest, the current years profits are overstated to the extent of approximately Rs.6.32 iacs and cumulative net losses are understated to the extent of approximately Rs 83.54 lacs.

9. NON-PROVISION ON NON-PERFORMING ASSETS AS PER RBI NORMS

As per Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 assets and receivables are required to be classified as NPAand provision for non- performing assets as prescribed is required to be made. The provision for non-performing assets as per these Directions on hire purchase and lease receivables, inter-corporate deposits given, bills receivable, advances recoverable in cash or in kind and other receivables required to be provided amounted to approx. Rs.2704.00 lacs (Net of Security received of Rs 601.93) but only provision of Rs. 1,556.79 lacs has been made. To the extent of non-provision of approximately Rs.1147.21 lacs the cumulative net loss reflected is understated.

Further, current assets, loans and advances to which the above provision for NPA relates are required to be classified as good and doubtful. Such distinction has not been drawn and the entire amount has been shown as good for recovery.

10. INCOME TAX

(a) Deferred Tax Assets

In accordance with Accounting Standard-22 issued by The Institute of Chartered Accountants of India, Deferred tax assets on accumulated depreciation and losses has not been accounted for since as per certain operational restrictions imposed, the Company is unable to conduct any new business and therefore it is uncertain whether there will be sufficient future taxable income against which such deferred tax assets can be realized.

(b) Tax Provision

The Company has not made/retained any provision for income tax during the year since the company has substantial accumulated brought forward losses from the earlier years.

11. INVESTMENTS/SECURITIES HELD AS STOCK-IN-TRADE

During the year there were no transactions relating to sale/purchase of stocks/ investment in shares. In the absence of a complete reconciliation/confirmation of the share division customer account Rs. 164.96 Lacs has been shown as current assets, the recoverability of which is uncertain. There are a number of shares in stock in trade held as bad deliveries and these shares have been valued at Rs 1 each per company. The Company is making efforts to transfer these shares to the name of the company. The Company have kept with itself few shares & securities as a security received from its customer against the recoverable amount of Rs 164.96 Lacs, which are under reconciliation & confirmation.

12. EMPLOYEE BENEFITS

(a) Defined Contribution Plans

The Company has recognized the contribution/liability in the Profit & Loss Account for the financial year 2009-10.

(b) Defined Benefit Plans & Other Long Term Benefits:

The following disclosures are made in accordance with AS 15 (Revised) pertaining to Defined Benefit Plans and Other Long Term Benefits:

13. GOING CONCERN BASIS

To comply with the directives of the Reserve Bank of India the company ceased to accept deposits from September 1997. Despite cessation of business, substantial accumulated losses, non-provision for full NPAs and interest payable, rejection of the "old scheme under review" and winding up petition filed by the Reserve Bank of India and various creditors of the company, the accounts of the company have been prepared on a "going concern" basis on an assumption & premises made by the management that

(a) fresh scheme would be approved by Honble Delhi High Court,

(b) adequate finances and opportunities would be available in the foreseeable future to enable the company to start operating on a profitable basis and

(c) the promoters of the Company have provided letter of support.

14. BALANCE CONFIRMATION

(a) Balance confirmation of bills receivable and payable, advances recoverable in cash or in kind, receivables and payables relating to lease and hire purchase, lease security deposit of which party wise details are not available. Balance confirmation of inter-corporate deposits, balance of ex-employees, margin against L/C, loans from institutions, banks, and other receivables and payables have not been received from the parties/persons concerned. In the absence of balance confirmation the closing balances as per books of accounts have been incorporated in the final accounts and have been shown, unless otherwise stated by the management, as good for recovery/payment. Time barred debts under the Limitations Act have not been separately ascertained and written off or provided for. In the absence of such confirmation & corresponding reconciliation, the financial impact cannot be ascertained.

(b) To overcome past deficiencies a new accounting software package was introduced in an earlier year on the basis of which accounts have been drawn. However, the aggregate of un- reconciled opening balances of various sub-ledgers with general ledger and subsequently other rectification entries/ unidentified balances requiring further analysis had been transferred to a separate account which at the end of the year is Rs. 197.09 lacs debit and Rs. 363.66 lacs credit and the net balance of Rs. 166.57 lacs has been shown as a current liability.

(c) Bank Balance of Rs. 2.17 lacs appearing in the books from 14 Banks were yet to be confirmed by the Banks as at 30th June, 2010.

15. Related Party disclosure

As required by Accounting Standard -AS 18 "Related Party Disclosure" issued by The Institute of Chartered Accountants of India are as follows:

List of related parties with whom transactions have taken place during the year:

A. Associate Companies --DCM Services Limited

B. Subsidiary Companies - Global IT Options Ltd.

C. Key Management-Personnel -ArifBaig, Chairman

-O.P.Gupta, Director

-S. K. Sharma, Executive Director

16. CONTINGENT LIABILITIES

(a) Claims lodged and contingent liability arising out of suits and winding up petitions filed against the company not acknowledged as debts amounts to Rs. 868.18 lacs. There are also other cases filed in consumer and other courts against the company for which the company is contingently liable but forwhich the amount has not been ascertained.

(b) Punjab & Sind bank has filed a recovery suit before the Debt Recovery Tribunal (DRT) for recovery of Rs. 1217.52 lacs against which the amount payable to them, as per books is Rs. 803.40 lacs. The company contends that the dues of the Bank will be settled as perthe fresh restructuring scheme and consequently no provision forthe difference of Rs. 414.12 lacs has been made. Since the Company has not made payment of interest & principal in accordance with the Fresh Restructuring Scheme filed with the Honble High Court, Rs 1217.52 became payable to PSB. No provision forthe difference of Rs. 414.12 lacs has been made by the Company.

(c) Induslnd Bank has filed a recovery suit before the Debt Recovery Tribunal (DRT), of Rs. 1042.42 lacs against which the amount payable to them as per books is Rs. 577.00 lacs. The company contends that the dues of the Bank will be settled as per the fresh restructuring scheme and consequently no provision for the difference of Rs. 465.42 lacs has been made.

(d) In the preceding yearthe Company had received Rs. 100.00 lacs from one of the Debtors and reduced the balance recoverable from the debtors account. Subsequently the Honble Punjab and Haryana Court deemed that payment to be an out of turn payment and asked the company to deposit the amount. The Company had filed a SLP with the Honble Supreme Court of India which has been dismissed by them. The Company is liable to deposit the amount mentioned above which has yet to be deposited.

(e) During the financial year the companys tenant has filed a claim of Rs 100.00 lacs against the company due to damages suffered by the tenant.

17. Company application to RBI for certificate of registration (CoR) as a NBFC had been rejected by the RBI. The company had made an appeal to the Appellate Authority which directed the RBI to keep its order of rejection of CoR in abeyance for a period of six months during which the Company shall file a revised scheme for restructuring. RBI has preferred an appeal before Honble Delhi High Court against the order of the Appellate Authority, which is still pending.

18. PREVIOUS YEARS FIGURES

Previous years figures have been regrouped and recast wherever necessary to make them comparable with the figures for the current year.