Notes to Accounts of Karur KCP Packkagings Ltd.

Mar 31, 2015

1. Terms / Rights / restrictions attached to shares:

The Company has only one class of Equity share. Each share has a paid-up value of Rs. 10/-. Every shareholder is entitled to one vote per share, except for the holders of Global Depository Receipts / Global Depository Shares, who don't hold voting right. Equity Share holders are entitled to Dividends in proportion to their holding, if declared. In any event Equity Share holders are entitled to receive the remaining assets of the Company after distribution of all lawful amounts payable, such distribution will be proportionate to the number of equity shares held up.

2. Details on each class of shares for a period of five years immediately preceding the date as at which Balance sheet is prepared.

i. There were no shares allotted for contract without payment being received in cash during the reporting period nor in the preceding five years, excepting 12,50,000 of Equity Shares issued under GDR during Financial Year 2011-12.

ii. No bonus shares were allotted during the reporting period nor in the preceding five years.

iii. No shares were bought back during the reporting period nor in the preceding five years.

Common Security:

Term Loans on Fixed Assets:

Term loan facility availed from Bankers are secured by deposit of title deeds of immovable properties and further secured by paripassu First Change of Fixed Assets and paripassu Second Charge on Current Assets of the Company. It carries the base rate of 12% and have a tenure of 6 years.

Specific Asset Security:

Wind Mills:

The Loan is secured by deposit of title deeds of wind mill located at SF No.23, Thungavi Village, Madathukulam Taluk, Tirupur District, Tamilnadu with Karur Vysya Bank Limited and repayment started from November 2011 to August 2018.

Co-gen Power Plant (10MW):

The Loan is availed from State Bank of India is secured by deposit of title deeds of land located at Marichinaickenpalayam, Pollachi, Tamil Nadu and paripassu first charge on Co-gen power plant and machineries. Repayment starting from October 2012 to March 2018.

Corporate loan

The Loan is availed from Karur Vysya Bank Limited is repayable in 60 monthly installments started from November 2015 to October 2020.

Interest for the above Term Loan range between 12 to 15% per annum.

Hire Purchase Loan:

Hire Purchase Loan from HDFC Bank Ltd., Kotak Mahindra Prime Ltd., and BMW Financial Services India Pvt Ltd., are secured by hypothecation of the specific asset. The installments vary between each and every HP Loan and also the terms of repayment / rate of interest / equated monthly interest. The tenure of HP loan are on average of beyond 30 months.

Working Capital, Packing Credit Loan, Letter of Credit Facilities & Other Loans from Banks:

The fund based and non-fund based working capital facilities are secured by a paripassu first charge on all the current assets and paripassu second charge on fixed assets of the Company. The said loans are also personally guaranteed by Chairman & Managing Director and two other Directors

3. DISCLOSURE PURSUANT TO FINANCIAL STATEMENTS-BALANCE SHEET

31.03.2015 31.03.2014 Rs. in lakhs Rs. in lakhs

Disclosures regarding Contingent, Disputed liabilities and Commitments Contingent liabilities on:

Factoring / Bills / Cheque Discounting Facilities Availed 2,182 1,680

Fccb Interest 2,817 2,404

Guarantees To Bankers of Subsidiary Company towards Standby Letter of Credit 18,777 18,030

Disputed Statutory Liabilities Not Provided For:

Central Excise / Service Tax/Sales Tax 120 119

Commitments:

Estimated Amount of Contracts To Be Executed On Capital Accounts And Not Provided For Nil Nil

The Company had recognized gratuity payable to working directors and the liability stand ascertained in accordance of Provisions for Payment of Gratuity Act, 1972.

N. Income tax assessment status

Income Tax Assessments have been completed up to Assessment year 2013-14.

E. Disclosures relating to Related Party

i) List of the Key Managerial Personnel with whom transactions have been taken place and relationships

Shri K.C.Pallani Shamy Shri K.C.P. Shivraman Key Managerial Personnel Smt. SR. Sudhaa

ii) List of the Other Related Parties

M/s Shriudha Ventures Pte Ltd., Wholly Owned Subsidiary

4. OTHER DISCLOSURES

A. The balances due from receivables, advances made, and payables are subject to confirmation from the party concerned. In the absence of the confirmation, the figures are as stated as per the ledger and will be reconciled in case of any discrepancy

B. In the opinion of the Board of Directors, assets other than fixed assets and non current investments have the value of realization in the ordinary course of business, at least equal to amount at which they are stated

C. In the opinion of the Board of Directors, no amounts are due for transfer tor to Investor Protection & Education Fund.

D. Figures of the previous year for the stand alone financial statements have been reworked, regrouped and reclassified wherever necessary to conform to current year's presentation.

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Mar 31, 2014

1 a. Terms / Rights / restrictions attached to shares:

The Company has only one class of Equity share. Each share has a paidup value of Rs. 10/-. Every shareholder is entitled to one vote per share, except for the holders of Global Depository Receipts / Global Depository Shares, who don''t hold voting right. Equity Share holders are entitled to Dividends in proportion to their holding, if declared. In any event Equity Share holders are entitled to receive the remaining assets of the Company after distribution of all lawful amounts payable. Such distribution will be proportionate to the number of equity shares held up.

b. Details on each class of shares for a period of five years immediately preceding the date as at which Balance Sheet is prepared.

i. There were no shares allotted for contract without payment being received in cash during the reporting period nor in the preceding five years, excepting 12,50,000 of Equity Shares issued under GDR during the Financial Year 2011-12.

ii. No bonus shares were allotted during the reporting period nor in the preceding five years.

iii. No shares were bought back during the reporting period nor in the preceding five years.

2. Common Security:

Term Loans on Fixed Assets:

Term loan facility availed from Bankers are secured by deposit of title deeds of immovable properties and further secured by paripassu First Charge of Fixed Assets and paripassu Second Charge on Current assets of the Company. It carries the base rate of 12% and have a tenure of 6 years.

Specific Asset Security:

Wind Mills:

The loan is secured by deposit of title deeds of wind mill located at SF No.23, Thungavi Village, Madathukulam Taluk, Tirupur District, Tamil Nadu with Karur Vysya Bank Limited and repayment started from Nov-2011 to Aug-2018.

Co-gen Power Plant ( 10MW):

The loan from State Bank of India is secured by deposit of title deeds of land located at Marichinaickenpalayam, Pollachi , Tamil Nadu and paripassu first charge on Co-gen power plant and machineries. Repayment starting from Oct-2012 to March-2018.

Corporate loan

Corporate Loan availed from Karur Vysya Bank Limited is repayable in 36 monthly installments started from Dec-2011 to Jan-2015.

Corporate Loan availed from The Shamrao Vithal Co-Operative Bank Limited is repayable in 60 monthly installments started from Jul-2013 to Jun-2018.

Interest for the above Term Loan range between 12% to 15% per annum.

Hire Purchase Loan:

Hire purchase loan from ICICI Bank, HDFC Bank, Kotak Mahindra Prime Limited and BMW Financial Services India Pvt Ltd., are secured by hypothecation of the specific asset. The installments vary between each and every HP Loan and also the terms of repay- ment/ rate of interest/ equated monthly interest. The tenure of HP loan are on average of beyond 30 months.

Working Capital, Packing credit loan & Letter of credit Facilities from Banks :

The fund based and non-fund based working capital facilities are secured by a paripassu first charge on all the current assets and paripassu second charge on fixed assets of the Company. The said loans are also personally guaranteed by Chairman & Managing Director and two other Directors.

The Company had recognised gratuity payable to working directors and the liability stand ascertained in accordance of Provisions for Payment of Gratuity Act 1972, during the year 2011-12 and the incremental liability provided this year.

3. Income tax assessment status

Income Tax Assessments have been completed up to Assessment year 2012-13.

4. OTHER DISCLOSURES

A. A.The Company has received an advance of USD 1,24,05,000/- from its Wholly Owned Subsidiary M/s. Shriudha Ventures Pte Ltd., Singapore during this year and the balance outstanding as on 31st March 2014 was USD1,45,74,558.85.

B. The balances due from receivables, advances made, and payables are subject to confirmation from the party concerned. In the absence of the confirmation, the figures are as stated as per the ledger and will be reconciled in case of any discrepancy.

C. In the opinion of the Board of Directors, assets other than fixed assets and non current investments have the value of realisation in the ordinary course of business, at least equal to amount at which they are stated.

D. Figures of the previous year have been reworked, regrouped and reclassified wherever necessary to conform to current year''s presentation.

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Mar 31, 2013

A. The Company has received an advance of USD 21,69,559 from its Wholly Owned Subsidiary M/s Shriudha Ventures Pte Ltd., Singapore during this year. The company to incorporate its subsidiary and meet other costs, has advanced USD 10,000 and the net credit of USD 21,59,559 is refected as due to subsidiary company.

B. The balances due from receivables, advances made, and payables are subject to confrmation from the party concerned. In the absence of the confrmation, the fgures are as stated as per the ledger and will be reconciled in case of any discrepancy.

C. In the opinion of the board of directors, assets other than fxed assets and non current investments have the value of revalution in the ordinary course of business, at least equal to amount at which they are stated.

D. Figures of the previous year have been reworked, regrouped and reclassifed wherever necessary to conform to current year''s presentation.

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Mar 31, 2012

A. Income tax assessment status

Income Tax Assessments have been completed up to Assessment year 2009-10.

B. Figures of the previous year have been reworked, regrouped and reclassified wherever necessary to conform to current year presentation

During the year ended 31.03.2012, the revised Schedule VI notified under the Indian Companies Act, 1956, has become applicable to the Company for preparation and presentation of its Financial Statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of Financial Statements. However, it has significant impact on presentation and disclosure made in the Financial Statements. The previous year's figures have also been reclassified accordingly.

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Mar 31, 2011

1. The company had been granted Rs.1682000/- as capital Investment Subsidy for the undertaking established by it, in the year 1990-91. On account of its full utilisation, the amount of subsidy, appearing as a reserve, has been reversed and credited to profit and loss account.

2. a) Term loan facility availed from Bankers are secured by deposit of tittle deeds of immovable properties and further secured by paripassu First Charge of Fixed Assets and paripassu Second Charge on Current assets of the company

b) Cash Credit and other working capital facilities availed from bankers are secured by paripassu First, charge on Stock in trade, stores and book debts of the company and paripassu second charge on fixed assets of the company. The said loans are also personally guaranteed by Chairman & Managing Director and two other Directors.

3. Hire purchase facility is secured by a specific charge on the Vehicles repayable later than one year and not later than five years Rs. 176.02 Lakhs (Rs.276.95 Lakhs).

4. Micro, Small and Medium Enterprises Development Act,2006

The company has not received any memorandum from any of its creditors, as required to be filed by them with their notified authority under the Micro, Small and Medium scale Enterprises Development Act, 2006 claiming their status as Micro, Small and Medium Enterprises.

(a) the principal amount and the interest due thereon remaining unpaid to any supplier as at the end of the accounting year is NIL (NIL).

(b) the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium Enterprises Development Act 2006. along with the amount of the payment made to the supplier beyond the appointed day during the accounting year is NIL (NIL).

(c ) the amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day dur- ing the year) but without adding the interest specified under the Micro, Small and Medium Enterprises Development Act,2006. is NIL (NIL)

(d) the amount of interest accrued and remaining unpaid as at the end of the accounting year is NIL (NIL).

(e) the amount of further interest remaining due and payable even in the succeeding years, until such date when the irterest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act,2006 is NIL (NIL).

31st March, 2011 31st March, 2010

5. Deposits with Bank includes deposits earmarked for Electricity Board, Puducherry Rs.14516632 Rs.13950797

6. The company had incurred an expenditure of Rs.5075322.70 towards raising USD 2.5 Million GDR. The expenditure will be written off over a period of 5 years at Rs. 1015065/- each year starting from the year 2010-11.

7. In respect of expenses incurred towards raising US $10000000 two percent unsecured foreign currency convertible bonds 'due 2011) amounting to Rs.24951584.27, the same has been considered as deferred revenue expenditure in the books of accounts and 1/5 the same has been written off during the financial year 2010-11. The terms of 2% coupon FCCB with an YTM of 7% due in 2011 have been modified vide RBI Letter FED. CO.ECBD 24882/03.02.766/2010-11 Dated 25 April 2011 to 0% FCCB coupon with an YTM of 5% due in 2016. The company has incurred an expenditure of Rs.1636855.30/- upto 31.3.2011 towards modifying the terms of FCCB and the same will be written off in future.

8. Income Tax Assessments have been completed up to Assessment year 2008-09.

9. Contingent liabilities on:

31st March, 2011 31st March, 2010

- Factoring / Bills / Cheque discounting facilities availed Rs. 798.45 Lakhs Rs. 1046.00 Lakhs

- FCCB interest Rs. 1290.08 Lakhs Rs. 1021.48 Lakhs

Disputed statutory liabilities not provided for

- Central Excise / Service Tax Rs. 122.35 Lakhs Rs. 135.71 Lakhs

- Sales Tax Rs. 4.75 Lakhs Rs. 4.75 Lakhs

10 The compliance with the applicable Accounting Standards are as under:

1 . DISCLOSURES REGARDING EMPLOYEES BENEFITS:

(a) Defined Contribution Plan : The company contributed a sum of Rs. 91.51 Lakhs (Rs. 67.75 Lakhs) towards Provident Fund

(b) Defined Benefit Plan: Gratuity

The company has contributed a gratuity fund for the benefit of its employees. The company's Gratuity scheme is administered by Life Insurance corporation of India under Group Gratuity Scheme to which the company contributes premium as deter- mined by Life Insurance Corporation of India as per Actuarial Valuation. The contribution so made during the year is Rs.21.31 Lakhs (Rs.33.83 Lakhs). Other requirements as per AS 15 have not been considered as the entire fund is managed by the Life Insurance Corporation of India.

Note: Figures in the brackets represents previous year figures.

2 . DISCLOSURES REGARDING BORROWING COSTS:

Pursuant to Accounting standard-16, the company has capitalized the borrowing costs of Rs.6784065/- in respect of qualifying assets.

4. DISCLOSURES RELATING TO RELATED PARTY: -

(i) List of Parties with whom transactions have been taken place and relationships:-

Sl. Name of the Related Party Relationship No.

1 Annam Lorry Forwarding Agencies

2 Arasi Hi-Tech Bio-Power Private Limited

3 K.C.P.Paper Sacks

4 Arasi Gunny Bags Suppliers

5 K.C.Palanisamy & Co.

6 SSR Buildtech Private Limited 7 SRSR Builders Private Limited

8 KSR Builders Private Limited Associate Companies / Firms / Proprietor Concern 9 Shram Bio-Diesel Private Limited

10 KCP Organic Mango Pulp Private Limited

11 KCP Pulp & Paper Pvt Ltd.

12 Pallani Shamy Propertiers Private Limited 13 Palani Shamy Builders Private Ltd

14 Affordable Housing Private Limited

15 Affordable Homes Private Limited

16 Shri K.C.Pallani Shamy

17 Shri K.C.P. Shivraman

Key Managerial Personnel

18 Smt. P. Annammal

19 Smt. SR. Sudha

Note: Figures in brackets represents previous year figures

iii) Remuneration as enhanced by the company, approved by the shareholders in the Extra Ordinary General Meeting held on 27th November, 2010, with effective from 1st November, 2010, has been provided for in the books of accounts.

iv) The company had appointed Smt.SR.Sudha as Vice-President Administration which stands approved in the General Meeting held on 30th September, 2010. The appointment and payment of remuneration is subject to further approval by Central Government pursuant to section 314 (IB) of the Companies Act 1956, for which the company is yet to make an application. The pending approval, the amount of remuneration as sanctioned by the General Meeting has been provided in the books of accounts.

b) There is no contingent Asset.

c) Contingent Liabilities and other disputed Liabilities are not provided for but disclosed by way of note.

11. In the opinion of the Board of Directors, all Current Assets, Deposits, Loans and Advances have a value on realization in the ordinary course of business a sum at least equal to the amount at which they are stated.

12. Figures of the previous year have been reworked, regrouped and reclassified wherever necessary to conform to current year presentation.

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Mar 31, 2010

A) Term loan facility availed from Bankers are secured by deposit of tittle deeds of immovable properties and further secured by paripassu First Charge of Fixed Assets and paripassu Second Charge on Current assets of the company

b) Cash Credit and other working capital facilities availed from bankers are secured by paripassu First charge on Stock in trade, stores and book debts of the company and paripassu second charge on fixed assets of the company.

c) The above loans are also personally guaranteed by Managing Director and two other Directors.

2. Interest free Sales Tax Loan outstanding is Rs.1702471.00 as on 31.03.2010 (Rs.1841250-00) and the total liability was repaid by 31.07.2010

3. Hire Purchase Finance facility is secured by a specific charge on the Vehicles repayable later than one year and not later than five years Rs. 276.95 Lakhs (Rs. 351.28 Lakhs)

4. Income Tax Assessments have been completed up to Assessment Year 2007-08.

5. In respect of expenses incurred towards raising US $10000000 two percent unsecured foreign currency convertible bonds (due 2011) amounting to Rs. 24951584.27, the same has been considered as deferred revenue expenditure in the books of accounts and 1/5 th of the same has been written off during the Financial Year 2009-2010

6. Micro, Small & Medium enterprises development Act, 2006.

The company has not received any memorandum from any of its creditors, as required to be filed by them with their notified authority under the Micro, Small and Medium scale Enterprises Development Act, 2006 claiming their status as Micro, Small and Medium

(a) the principal amount and the interest due thereon remaining unpaid to any supplier as at the end of the accounting year is NIL (NIL)

(b) the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium Enterprises Development Act 2006, along with the amount of the payment made to the supplier beyond the appointed day during the accounting year is NIL (NIL)

(c) the amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the Micro, Small and Medium Enterprises Development A

(d) the amount of interest accrued and remaining unpaid as at the end of the accounting year is NIL (NIL)

(e) the amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductiable expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006 is NIL (NIL).

Note: Figures in the brackets represents previous year figures.

7. Disclosures regarding Employees Benefits:

(a) Defined Contribution Plan : The company contributed a sum of Rs. 67.75 Lakhs (Rs. 51.12 Lakhs) towards Provident Fund

(b) Defined Benefit Plan: Gratuity

The company has contributed a gratuity fund for the benefit of its employees. The companys Gratuity scheme is administered by Life Insurance corporation of India under Group Gratuity Scheme to which the company contributes premium as determined by Life Insurance Corporation of India as per Actuarial Valuation. The contribution so made during the year is Rs.33.83 Lakhs (Rs.53.56 Lakhs). Other requirements as per AS 15 have not been considered as the entire fund is managed by Life Insurance Corporation of India.

Note: Figures in the brackets represents previous year figures.

b) There is no contingent Asset.

c) Contingent Liabilities and other disputed Liabilities are not provided for but disclosed by way of note.

8. In the opinion of the Board of Directors, all Current Assets, Deposits, Loans and Advances have a value on realization in the ordinary course of business a sum at least equal to the amount at which they are stated.

9. Figures of the previous year have been reworked, regrouped and reclassified wherever necessary to conform to current year presentation.