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Notes to Accounts of Magna Colors Ltd.

Mar 31, 2011

Not Available

Mar 31, 2010

1. Contingent Liabilities not provided for in respect of the following:-

a. Liability towards penal interest claimed by various unsecured creditors who have filed / under the process of filing winding up cases against the Company under Section 433 of the Companies Act, 1956 and under section 138 of the Negotiable Instruments Act, 1881 - Amount unascertainable (Previous Year-Amount unascertainable).

b. Liability as may rise due to non / delayed compliance of certain fiscal status Amount unascertainable (Previous year -Amount unascertainable).

c. Liabilities as may arise due to non-performance by the Company as per the undertaking given to various Banks and Financial institutions - Amount unascertainable (Previous Year - Amount unascertainable).

d. Liabilities as may rise to the Company on account of writing back of balances in sundry creditors and other payables - Amount unascertainable (Previous Year - Nil).

e. Liabilities as may arise on the company and its directors in their individual capacity and a group company as co-guarantors of the Loan / facilities borrowed by the Company form lime to time from Banks / financial Institutions- Amount presently unascertainable (Previous Year- Amount unascertainable).

2. The accumulated losses of the Company had eroded its entire Net worth and the lenders of term loans and working capital facilities have recalled term loans and working capital facilities along with interest thereon and proceeded against the Company through the Debt Recovery Tribunal for recovery. The lenders have since taken the possession of the Factory Land and Building, Plants and Machinery and other assets situated at Tarapur Plants of the Company. The said Tribunal has ordered for the disposal the above assets vide its Order dated 24.08.2004.

As per the Debt Recovery Tribunal Order No. 339 / 2002 dated 22"*1 November 2004, the auction of the Company's situated at Tarapur realized Rs.101.00 Lacs, of which Rs50.00 Lacs was realized subsequent to the said Order (ie on 24.02.20C5). Apart from the above, as per the said Order, the Bank had earlier received an of the amounts received / appropriated by the Bank amount to Rs.10.29 Lacs. Thus the aggregate leaving a balance of Rs.441.13 Lacs (upon inclusion of an interest claim of Rs.75.16 Lacs and after adjustments of the interest income, net of bank charges which is accounted for by the Company up to previous year.).

The said loans and facilities, no longer secured by assets of the Company, have become unsecured loans and shown as such in the financial statements as at the close of the year. The said balance has now become joint and several liability of the Company, its two directors (including one Ex-director) and M/s Toshniwal Chemicals Ltd, being the borrower and guarantors of the said loans / facilities.

The above amounts as represented .by the accounts--of the Company are exclusive of interest to be calculated at 1.50% per annum with quarterly rests from the date of filing of original application till full realization. Amount of such interest is presently no ascertained.

3. The accounts of the Company for the year continued, to be prepared on a going concern basis in spite to fact that the management of the Company has also concluded that the Company can not continue as a going concern in future. The said conclusion is a consequence of the erosion of entire net worth and disposal of substantial assets of the Company adversely affecting the going concern concept. However, the financial statements for the current year have not been adjusted, for the recoverability and classification of assets and liabilities as a consequence of the. inability that the extent of the effects of the resultant adjustment to the assets and liabilities of the Company as at the year end and loss for the year is presently not ascertainable.

4.In view of the above events, the balances in the term Loans Cash Credit and working capital facilities obtained from Bank which became unsecured to the extent of non reliability from disposal of assets secured against the said Loans / Facilities have been shown inn a combined manner- Amount not individually ascertainable (Previous year Amount unascertainable)./

5. The company has defaulted in the matter of the one time settlement with SICOM Ltd. Due to which the original along with accrued interest thereon company paid during the year.

6. No provisions for interest on the Term Loan and other facilities was made during the year under review. These continued as Non performing assets by the Banks of Baroda during the year under review.

7. In the opinion the management the closing balances of the current assets Loan and Advances the above write off. are stated at the expected realizable values and adequate provisions have been made for all known liabilities.

8. No differed tax Assets / Liability has been recognized in the accounts, keeping in view the substantial current as well. as carried forward losses and unobserved depreciation as per the prevailing Income tax Laws and the management's opinion that there will be no taxable income in the future. Also no deferred tax Assets hat been recognized on the timing difference in depreciation between the Companies Act 1956 and the Income Tax Act, 1961.

9 The Company follows cash basis of accounting for gratuity and leave encashment and accounts for the same only upon payment, for which amount is unascertainable (Previous Year - unascertainable), in contravention of the mandatory Accounting Standard- 15 which prescribe form vision on accrual basis. However, there are no qualifying employees as at

10. The debtor's balances represent the balances in which directors are interested - Nil (Previous Year - Rs.Nil).

11. Suras due to small scale industrial undertaking under Current Liabilities as per the information available with the Company and relied upon by the auditors - Amount unascertained (previous Year-Amount unascertained).

12. Balances appearing in Loam and Advances, Deposits and Current liabilities are subject to conformation from the respective panics.

13. Deferral of Sales Tax is under Sales Tax incentive Scheme, 1983 of government of Maharashtra and the same is payable in five Annual installments after the expiry of 10 Year from the data of a ailment (i.e., financial year 2002-2003 onwards). However, demand has been raised by the Sales Tax Department till date. Amount paid by the Company towards the above during the year - Nil (Previous Year - Nil ).

14. The Company has not complied with provision of Section 292A of the Companies Act 1956, the requirement of Clauses 41 and 49 of listing Agreements with the Stock Exchanges and the Securities and Exchange Board of India as regards constitution of Audi! Committee and convention of Audit Committee meetings and declaration of Financial results and Corporate Governance During the year.

15. Information Pursuant to 3 and 4 Part II of Schedule VI to the Companies Act, to the extent applicable. NIL

16. Information Pursuant to Part IV of Schedule VI to the Company Act regarding balance Sheet Abstract and Company's General Business Profile.

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