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Notes to Accounts of Shree Rama Multi-Tech Ltd.

Mar 31, 2015

1. (a) Andhra Bank Ltd. has filed suit in Debt Recovery Tribunal against East West Polyart Ltd. as Principal Debtor and the Company as a guarantor and Recovery officer has demanded Rs 933.34 lacs (net of Recovery already made and including interest). Andhra Bank has also given notice u/s 434 of the Companies Act, 1956 for winding up of the Company Review petition against recovery certificate Dated 19th September, 2013 is filed. (b) The Kalupur Commercial Co.op. Bank (KCCB) has filed a suit against the company for recovery of Rs.50 lacs towards Bills Payable and interest accrued thereon of Rs. 263.07 lacs till 31.03.15 (Previ- ous year Rs 224.62 lacs) against which the company has preferred an appeal and no provision is made in the books.

2. (a) In respect of 10,00,000 15% Cumulative Preference Shares of Rs.100/- each which were redeemable in three equal installments at the end of third, fourth and fifth year from 30th March,1998, 3,33,334 Preference Shares being first installment were redeemed on 30th March, 2001. The remaining 6,66,666 Preference Shares are yet to be redeemed. (b) The Company has declared and provided in books dividend of Rs. 100 lacs for the year 2000-01 on 666666 15% Redeemable Preference Shares which was subsequently annulled by Board of Directors and members of the Company in Extra Ordinary Meeting held on 26th Oct, 2002.In view of the pending approval from appropriate authority, the Company has not reversed provision of said annulled dividend and also not transferred the said amount to IEPF.

3. The lenders holding post-dated cheques have initiated action u/s. 138 of the Negotiable Instruments Act, 1881 for Rs. 200 lacs in respect of other lenders who has initiated actions u/s 138 has settled dues under OTS and necessary withdrawal petition are under process.

4.1 The company has filed the scheme of Arrangement and Compromise with the Financial Institutions/Banks and Shareholders filed on 17/07/08 bearing petition No. 401/2008 and it is approved by majority of Share- holders and lenders in the meeting held on 27/08/2008 and 30/08/2008 respectively. The said scheme is pending before larger bench of the Hon'ble Court of Gujarat for further hearing.

4.2 In expectation of a positive outcome of settlement and compromise with lenders referred to above, the accounts have been prepared on "Going Concern" basis.

5 The company has not discharged principal liability towards loans and debentures aggregating to Rs. 8591.13 lacs. The company has also not provided interest of Rs. 1206.51 lacs (Previous Year Rs. 1459.76 lacs) on outstanding loans and Debentures which are under settlement for the year ending on 31st March, 2015. Therefore, loss of the year would have been increased by Rs 1206.51 lacs. The accumulated interest not provided for up to 31-03-2015 is Rs. 16052.36 lacs (Previous Year Rs. 17943.30 lacs).

6 The company has been sanctioned credit facilities of Letters of Credit, Overdraft and guarantee against lien of Fixed Deposits. The Company has pledged Fixed Deposits of Rs. 1310.95 lacs (Previous Year Rs. 1316.58 lacs) plus accrued interest thereon for the Letter of Credit, Overdraft facility and Guarantee of Rs. 38.06 lacs, Rs. 1120.02 lacs and Rs. 152.87 lacs respectively as on 31.03.2015. (Prev. Year Rs. 27.74 lacs against Letter of credit Rs. 1162.81 lacs against over draft facility and Rs. 126.03 against Guarantee).

7. Outstanding balances as on 31-03-2015 of Creditors, Debtors, Secured and Unsecured Loans & Advances given are subject to confirmation / reconciliation. Necessary adjustments if any will be made on completion of reconciliation.

8. The company has in past undertaken major exercise of restructuring and repayment of its old debts and realignment of assets and liabilities to reflect correct picture of its financial statements. In the process, the company has identified and ascertained the status of old legal cases, disputed debtors, receivables and payables, idle and obsolete fixed assets etc. Accordingly, the company has given necessary accounting treatment in the books of accounts which inter alia includes the following:- i) The Company has in earlier year received demand notice for excise duty from Excise department for Rs. 2665.30 lacs. The Company had made provision of excise duty of Rs. 2665.30 lacs And interest of Rs. 2087.59 lacs thereon in books of account and therefore on the basis of legal advice and CESTAT order dated 22/06/2012 the company reversed the said provision and has disclosed the said amount of Rs. 5068.36 lacs as contingent liabilities. The company has paid Rs. 300 lacs on accounts against such liability.

ii) In respect of old disputed debtors against whom legal cases are filed, the company has made provi- sion of Rs. 26.59 lacs for doubtful debts.

9. During the year, Company has entered into one time settlement with some of the lenders resulted into waiver of portion of loan. The Company has settled said loans for Rs. 639.09 lacs against carrying amount of Rs. 1666.67 lacs.

The resultant surplus of Rs. 1027.57 lacs arising on such settlement agreed by the lenders have been credited to Profit & Loss Account by Rs. 77.57 lacs and to Capital Reserve account by Rs. 950 lacs during the year. (Previous Year NIL)

10. (a) During the year there is Exchange Fluctuation loss (net) of Rs 10.66 lacs (Previous Year loss of Rs. 18.74 Lacs) on current account and the same is shown separately.

(b) The Exchange Fluctuation gain (net) on capital Account of Rs. 11.70 lacs is capitalized to cost of Fixed Assets (Previous year loss of Rs. 9.67 lacs)

11. In view of carried forward business losses and depreciation in the books, the company is not liable for Income Tax Liability under section 115JB for Minimum Alternative Tax.

12. In view of the Accumulated loss,

(i) No transfer has been made to the Debenture Redemption Reserves in respect of Secured and Unse- cured Debentures and

(ii) No amount is transferred to Capital Redemption Reserve in respect of preference shares.

13. In respect of disputed Income Tax matters of earlier years, the Company has received various orders giving appeal effect, Rectification, Refund and Assessment of set aside matters etc.

14. As permitted by CERC and IERC (Regulatory authorities) the company has partially opted for purchase of power through approved Power Exchange which has resulted into gain of Rs 10.26 lacs (Previous Year RS.20.61 lacs) and consequently the power expenses was reduced to that extent.

15. Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule II. Accordingly, the unamortised carrying value is being depreciated / amortised over the remaining useful life of particular assets. The written down value of Fixed Assets, useful life of which was completed as on 1st April, 2014 have been adjusted (net of Deferred tax), in the opening balance of retained earnings.

16. The Annual Accounts of the company for the year 2014-15 have been approved by the board of directors in its meeting held on 26.05.2015 and statutory auditors have also given their audit report on the said accounts. The accounts were published and also filed with stock exchange.

After careful consideration of various factors affecting financial statements, far reaching impact of recent changes in the Companies Act 2013( the "Act"), changes in the Basis of depreciation and its impact on fixed assets, nature & use of assets, actual capacity utilization of plant etc. the management has decided to recompute the useful life of its major specified plant and machineries.

The MCA vide its notification dt. 29.08.2014 has also given option to adopt useful life other than what is prescribed in Schedule II of the Act, on the basis of report of technical valuer. The company has according got carried out physical verification of its major specified plant & machinery and its useful life.

On the basis of useful life determined and valuation report obtained from Government approved valuer, the company has reworked the depreciation on the basis of Useful life of respective assets for the current year and also amount to be charged to Retained earnings as provided in the companies act.

As per revised computation, the depreciation to be charged to Statement of Profit and Loss is worked out at Rs 1589.94 lacs and depreciation to be charged to retained earnings is worked out at Rs.377.51 lacs consequentially charge for the depreciation is lower by Rs 741.96 lacs and charge to retained earning has reduced by Rs 1132.34 lacs and deferred tax assets is reduced by Rs 579.16 lacs as compared to earlier audited accounts.

17. Previous year's figures have been regrouped / re-stated / reclassified wherever necessary. Figures in brackets relate to the previous year unless otherwise stated. Previous year figures in notes forming part of accounts are recalculated to bring the figures in line with relevance in the matter.


Mar 31, 2014

1. Contingent Liabilities :

Sr. Particulars Amounts (Rs. in lacs) No. 2013-2014 2012-2013

a Dividend on 666666 15% Redeemable 1250.00 1150.00 Cumulative Preference Shares till date (Note No.3 below)

b Interest in loans & debentures 17943.30 16483.54 (Note No. 6 below)

c(i) Corporate guarantee given to the 400.00 400.00 Banks for term loan of Rs 400.00 Lacs. (Note No : 2 (a) below)

(ii) Bank Guarantee given to GEB against 126.03 126.03 security of Bank Deposits

d Suit filed by The Kalupar Comm. 274.62 240.90 Co.Op. Bank Ltd in respect of bills payable (including interest). (Note No : 2 (b) below)

e Claims against the company not 293.42 293.42 acknowledged as debts. Excise authorities have issued show-cause notices for various credits availed as well as rejecting the claims of the company which the company has disputed and no provision is made in the books.

f Estimated amount of contracts 5.39 5.30 remaining to be executed on Capital Account (Net of Advances)

g Excise proceeding in respect 4885.19 Nil the order dtd.30/12/2005 Including interest & penalty (see note No.9 (i) below)

h Pending case for proceeding 200.00 200.00 U/S 138 of Negotiable Instrument Act (Note No : 4 below)

2. The Company is occupying premises at Mumbai beyond the period of Leave & License agreement to secure its loans and advances given to the owner of premises. There are counter suits for vacancy of premises and recovery of Loans and Advances along with interest thereon are pending in the Courts between the Company and owner of premises. Pending litigation, the Company has neither provided for Rent since May 2002 in its books nor interest on Loans and Advances. On final outcome of the suits, necessary accounting entries will be passed for rent payable and interest receivable, if any on advances given by the Company.

2. (a) Andhra Bank Ltd. has filed suit in Debt Recovery Tribunal against East West Polyart Ltd. as Principal Debtor and the Company as a guarantor and Recovery officer has demanded Rs 933.34 lacs (net of Recovery already made and including interest). Andhra Bank has also given notice u/s 434 of the Companies Act, 1956 for winding up of the Company.

(b) The Kalupur Commercial Co.op. Bank (KCCB) has filed a suit against the company for recovery of Rs.50 lacs towards Bills Payable and interest accrued thereon of Rs. 224.62 lacs till 31.03.14 (Previous year Rs 190.89 lacs) against which the company has preferred an appeal and no provision is made in the books.

3. (a) In respect of 10,00,000 15% Cumulative Preference Shares of Rs.100/- each which were redeemable in three equal installments at the end of third, fourth and fifth year from 30th March,1998, 3,33,334 Preference Shares being first installment were redeemed on 30th March, 2001. The remaining 6,66,666 Preference Shares are yet to be redeemed.

(b) The Company has declared and provided in books dividend of Rs. 100 lacs for the year 2000-01 on 666666 15% Redeemable Preference Shares which was subsequently annulled by Board of Directors and members of the Company in Extra Ordinary Meeting held on 26th Oct, 2002.In view of the pending approval from appropriate authority, the Company has not reversed provision of said dividend annulled and also not transferred the said amount to IEPF.

4. The lenders holding post-dated cheques have initiated action u/s. 138 of the Negotiable Instruments Act, 1881 for Rs. 200 lacs in respect of other lenders who has initiated actions u/s 138 has settled dues under OTS and necessary withdrawal petition are under process.

5.1 The company has filed the scheme of Arrangement and Compromise with the Financial Institutions/Banks and Shareholders filed on 17/07/2008 bearing petition No. 401/2008 and it is approved by majority of Shareholders and lenders in the meeting held on 27/08/2008 and 30/08/2008 respectively. The said scheme is pending before the Hon''ble Court of Gujarat for further hearing.

5.2 In expectation of a positive outcome of settlement and compromise with lenders referred to above, the accounts have been prepared on "Going Concern" basis.

6 The company has not discharged principal liability towards loans and debentures aggregating to Rs. 10257.79 lacs. The company has also not provided interest of Rs. 1459.76 lacs (Previous Year Rs. 1460.59 lacs) on outstanding loans and Debentures which are under settlement for the year ending on 31st March, 2014. Therefore, profit of the year would have been reduced by Rs 1459.76 lacs. The accumulated interest not provided for up to 31-03-2014 is Rs. 17943.30 lacs (Previous Year Rs. 16483.54 lacs).

7 The company has been sanctioned credit facilities of Letters of Credit, Overdraft and guarantee against lien of Fixed Deposits. The Company has pledged Fixed Deposits of Rs. 1316.59 lacs (Previous Year Rs.887.50 lacs) plus accrued interest thereon for the Letter of Credit, Overdraft facility and Guarantee of Rs. 27.74 lacs, Rs. 1162.81 lacs and Rs. 126.04 lacs respectively as on 31.03.2014.(Prev. Year Rs. 88.29 lacs against Letter of credit, Rs. 673.17 lacs against over draft facility and Rs. 126.04 lacs against Guarantee ).

8. Outstanding balances as on 31-03-2014 of Creditors, Debtors, Secured and Unsecured Loans & Advances given are subject to confirmation / reconciliation. Necessary adjustments if any will be made on completion of reconciliation.

9. The company has in recent past undertaken major exercise of restructuring and repayment of its old debts and realignment of assets and liabilities to reflect correct picture of its financial statements. In the process, the company has identified and ascertained the status of old legal cases, disputed debtors, receivables and payables, idle and obsolete fixed assets etc. Accordingly, the company has given necessary accounting treatment in the books of accounts which inter alia includes the following:-

i) The company has made provision for excise duty for Rs.2665.30 lacs in respect of demand notice received from excise department in earlier year. The company has also made provision for interest liabilities of Rs.2087.59 lacs on such excise duty from year to year. The company has been legally advised by consultants and experts that provision for excise duty is no longer required in view of pronouncement of CESTAT order dated 22nd June 2012 and accordingly company has reversed the provision of excise duty liability and interest thereon and treated the same as contingent liability. However "on account" payment of Rs. 300 lacs against such liability is reported under "Loans & Advances".

ii) The company has ascertained impaired assets after examining technical aspects and assessment thereof and passed accounting entries for loss arising on impaired assets aggregating to Rs.130.05 lacs.(previous year 200.74 lacs)

iii) In respect of old disputed debtors against whom legal cases are filed, the company has made provision of Rs. 26.59 lacs for doubtful debts.

iv) Other old and stagnant Receivables and Payables are written back amounting to Rs. 7.01 lacs (Net).

v) The company has recognized income of Rs. 194.41 lacs plus interest thereon Rs. 52.54 lacs in respect of settlement of the very old disputed insurance claim awarded by the Arbitration in favour of the company.

10. (a) During the year there is Exchange Fluctuation loss (net) of Rs 18.74 lacs (Previous Year loss of Rs. 3.53 Lacs) on current account and the same is shown separately.

(b) The Exchange Fluctuation loss (net) on capital Account of Rs. 9.67 lacs is capitalized to cost of Fixed Assets (Previous year loss of Rs. 2.06 lacs)

11. In view of carried forward business losses and depreciation in the books, the company is not liable for Income Tax Liability under section 115JB for Minimum Alternative Tax.

12. In view of the Accumulated loss,

(i) No transfer has been made to the Debenture Redemption Reserves in respect of Secured and Unsecured Debentures and

(ii) No amount is transferred to Capital Redemption Reserve in respect of preference shares.

13. In respect of disputed Income Tax matters of earlier years, the Company has received various orders giving appeal effect, Rectification, Refund and Assessment of set aside matters etc. The interest of Rs. 129.95 lacs arising on refund is accounted for during the year.

14. As permitted by CERC and IERC (Regulatory authorities) the company has partially opted for purchase of power through approved Power Exchange which has resulted into gain of Rs 20.61 lacs and consequently the power expenses was reduced to that extent.

15. Previous year''s figures have been regrouped / re-stated / reclassified wherever necessary. Figures in brackets relate to the previous year unless otherwise stated. Previous year figures in notes forming part of accounts are recalculated to bring the figures in line with relevance in the matter.


Mar 31, 2013

1. Contingent Liabilities :

Sr. Amounts (Rs. in lacs) No. Particulars 2012-2013 2011-2012

1 Dividend on 15% Redeemable Cumulative 1150.00 1050.00 Preference Shares till date (Note No.3 below)

2 Additional interest etc. on loans 16483.54 15022.95

3 (i) Corporate guarantee given to the Banks for term loan of 400.00 400.00

Rs 400.00 Lacs. (Note No : 2 (a) )

Excise authorities have issued show-cause notices for various credits availed as well as rejecting the claims of the company which the company has disputed and no provision is made in the books.

2. The Company has availed benefit under EPCG scheme for import of Capital goods which were purchased in the year 2011-12 pertaining to Packaging Division at concessional rate. As a result the Company has to undertake additional export obligation over and above average export performed in last 3 years. The liability to pay back concessional duty of Rs. 80.18 lacs with interest may arise in future if the export obligation is not met with within prescribed period.

3. The Company is occupying premises at Mumbai beyond the period of Leave & License agreement to secure its loans and advances given to the owner of premises. There are counter suits for vacancy of premises and recovery of Loans and Advances along with interest thereon are pending in the Courts between the Company and owner of premises. Pending litigation, the Company has neither provided for Rent since May 2002 in its books nor interest on Loans and Advances, On final outcome of the suits, necessary accounting entries will be passed for rent payable and interest receivable, if any on advances given by the Company.

2.(a) Andhra Bank Ltd. has filed suit for recovery of Rs. 564.89 lacs (including Interest) in Debt Recovery Tribu- nal against East West Polyard Ltd. as Principal Debtor and against the company as being a guarantor. Andhra Bank has given notice u/s 434 of the Companies Act, 1956 for winding up of the Company.

(b) The Kalupur Commercial Co.op. Bank (KCCB) has filed a suit against the company for recovery of Rs.50 lacs towards Bills Payable and interest accrued thereon of Rs.190.89 lacs till 31.03.13 (P.Y Rs 161.31 lacs) against which the company has preferred an appeal and no provision is made in the books.

3.(a) 10,00,000 15% Cumulative Preference Shares of Rs.100/- each issued and which were redeemable in three equal installments at the end of third, fourth and fifth year from 30th March, 1998. 3,33,334 Preference Shares being first installment were redeemed on 30th March, 2001. The remaining 6,66,666 Preference Shares are yet to be redeemed.

(b) The Company has declared and provided in books dividend of Rs. 100 lacs for the year 2000-01 on 666666 15% Redeemable Preference Share which was subsequently annulled by Board of Directors and members of the Company in Extra Ordinary Meeting held on 26th Oct, 2002.In view of the pending approval from appropriate authority, the Company has not reversed provision as dividend was annulled. Therefore, it was not required to transfer the said amount to IEPF.

4.1 The lenders recalled their loans and debentures upon company''s failure to pay its dues on time. As per recall notices, repayment liability of principal amount is Rs. 10257.80 lacs, accumulated interest till 31.03.13 is Rs.16483.54 lacs (previous year Rs. 15022.95) and additional interest etc. for the F.Y. 2012-13 is Rs. 1460.59 lacs (previous year Rs. 1465.52 lacs).

4.2 The lenders holding post-dated cheques have initiated action u/s. 138 of the Negotiable Instruments Act, 1881 for Rs. 4536.68 lacs out of which the debt of Rs. 4336.68 lacs has settled under OTS scheme.

4.3 The company has filed the scheme of Arrangement and Compromise with the Financial Institutions/Banks and Shareholders filed on 17/07/08 bearing petition No. 401/2008 and it is approved by majority of Share- holders and lenders in the meeting held on 27/08/2008 and 30/08/2008 respectively. The said scheme is pending before the Hon''ble Court of Gujarat for further hearing.

4.4 During the year, Company has entered into settlement with some of the lenders resulted into waiver of portion of outstanding loans. The Company has settled said loans for Rs. 5144.70 lacs as against carrying amount of Rs. 17666.48 lacs. The resultant surplus of Rs. 12521.78 lacs arising on such settlement has been credited to the Capital Reserve.

5 In expectation of a positive outcome of settlement and compromise with lenders referred to above, the accounts have been prepared on "Going Concern" basis.

6 The company has not provided interest of Rs. 1460.59 lacs (Previous Year Rs. 1465.52 lacs) on outstanding borrowings and Debentures which are under settlement for the year ending on 31st March 2013. Therefore, loss of the year would have been more by Rs 1460.59 lacs. The accumulated interest not provided for up to 31-03-2013 is Rs. 16483.54 lacs (Previous Year Rs. 15022.95 lacs)

7 The company has been sanctioned credit facilities of Letters of Credit, Overdraft and guarantee against lien of Fixed Deposits. The Company has pledged F.D. of Rs. 887.50 lacs for the Letter of Credit, Overdraft facility and Guarantee of Rs. 88.29 lacs, Rs. 673.18 lacs and Rs. 126.03 Lacs respectively up to 31.03.2013.(Prev. Year Rs. 15.00 lacs against L/C, Rs. 1214.64 lacs against over draft facility and Rs.47.59 against Guarantee )

8. The Company, at the instance of its Board of Directors, undertaken an exercise under supervision and with help of professional firm to evaluate its Fixed Assets on the basis of Useful life, carrying value and need for the provision of depreciation as per the requirements of Sch. XIV of the Companies Act, 1956 and other related aspects. The company has received report from the said firm after examining technical aspects of observation, suggestion and recommendation contained in the said report, it has passed necessary accounting entries for loss arising on disposal, discarded and / or impaired assets aggregating to Rs.1074.98 lacs.

9. Outstanding balances as on 31-03-2013 of Creditors, Debtors, Secured and Unsecured Loans and Loans & Advances given are subject to confirmation / reconciliation. Necessary adjustments if any will be made on completion of reconciliation.

10. (a) During the year there is net Exchange Fluctuation loss of Rs 3.53 lacs (Previous Year loss of Rs. 6.94 Lacs) on current account & the same is shown separately.

(b) The Exchange Fluctuation loss on capital Account of Rs.2.06 lacs is capitalized to cost of Fixed Assets (Previous year gain of Rs. 11.03 lacs )

11. In view of carried forward business losses and depreciation in the books, the company is not liable for Income Tax Liability under section 115JB of Minimum Alternative Tax.

12. In view of the Accumulated loss,

(i) No transfer has been made to the Debenture Redemption Reserves in respect of Secured and Unse- cured Debentures and

(ii) No amount is transferred to Capital Redemption Reserve in respect of preference shares.

13. In respect of disputed Income Tax matters of earlier years, the Company has received various orders giving appeal effect, Rectification, Refund, Assessment of set aside matters etc. The interest of Rs. 121.37 lacs arising on refund is accounted for during the year.

14. In earlier years the company has accounted for insurance claim receivable in respect of fire took place in the factory premises on 25th April 1998 which was under dispute. After rigorous follow up and negotiation with insurance company Rs.186.65 lacs, being amount identified as irrecoverable is written off during the year.

15 The Interest expenses include provision for the interest of Rs. 132.29 lacs on disputed Excise Duty liability provided during the year. The Company has already made provision for excise duty liability of Rs. 4752.89 lacs in the respective years

16. During the year the company has disposed of all balance assets of Karannagar Unit viz Land, Building, Electrical installation, Furniture & fixtures etc. , the said unit was not used since 8 years.

17. Previous year figures have been regrouped / re-stated / reclassified where necessary. Figures in brackets relate to the previous year unless otherwise stated. Previous year figures in notes forming part of accounts are recalculated to bring the figures in line with relevance in the matter.


Mar 31, 2012

1. Contingent Liabilities :

Sr. No. Particulars Amounts (Rs. in lacs) 2011-2012 2010-11

1 Dividend on 15% Redeemable Cumulative 1050.00 950.00 Preference Shares till date (Note No.3 below)

2 Additional interest, Penal interest and 3816.27 5053.65 liquidated damages on loans

3 (i) Corporate guarantee given to the Banks for term loan of Rs 400.00 Lacs each. (Note No : 2 (a) 800.00 800.00

(ii) Bank Gurantee given to GEB against security of Bank Deposits 46.74 46.74

4 Suit filed by The Kalupar Comm. 211.31 185.36 Co.Op. Bank Ltd in respect of bills payable. (Note No : 2 (b)

5. Claims against the company not acknowledged as debts. 293.42 161.98 Excise authorities have issued show-cause notices for various credits availed as well as rejecting the claims of the company which the company has disputed and no provision is made in the books.

6 Estimated amount of contracts remaining to be executed 14.77 387.82 on Capital Account (Net of Advances)

7. The Company has availed benefit under EPCG scheme for import of Capital goods pertaining to Packaging Division at concessional rate. As a result the Company has to undertake additional export obligation over and above average export performed in last 3 years. The liability to pay back concessional duty of Rs. 80.18 lacs with interest may arise in future if the export obligation is not met with within prescribed period.

8. The Company is occupying premises at Mumbai beyond the period of Leave & License agreement to secure its loans and advances given to the owner of premises. There are counter suits for vacancy of premises and recovery of Loans and Advances along with interest thereon are pending in the Courts between the Company and owner of premises. Pending litigation, the Company has neither provided for Rent since May 2002 in its books nor interest on Loans and Advances, On final outcome of the suits, necessary accounting entries will be passed for provision of rent and interest on advances given by the Company.

2.(a) Andhra Bank Ltd. has filed suit for recovery of Rs. 564.89 lacs (including Interest) in Debt Recovery Tribunal against East West Polyart Ltd. as Principal Debtor and against the Company as being a guarantor. Andhra Bank has given notice u/s 434 of the Companies Act, 1956 for winding up of the Company.

(b) The Kalupur Commercial Co.op. Bank (KCCB) has filed a suit against the company for recovery of Rs.50 lacs towards Bills Payable and interest accrued thereon of Rs.161.31 lacs till 31.03.12 (P.Y Rs 135.36 lacs) against which the company has preferred an appeal and no provision is made in the books.

3.(a) 10,00,000 15% Cumulative Preference Shares of Rs.100/- each issued and which were redeemable in three equal installments at the end of third, fourth and fifth year from 30th March,1998. 3,33,334 Preference Shares being first installment were redeemed on 30th March, 2001. The remaining 6,66,666 Preference Shares are yet to be redeemed.

(b) The Company has declared and provided in books dividend of Rs. 100 lacs for the year 2000-01 on 666666 15% Redeemable Preference Share which was subsequently annulled by Board of Directors and members of the Company in Extra Ordinary Meeting held on 26th Oct, 2002.ln view of the pending approval from appropriate authority, the Company has neither reversed the provision nor transferred the amount to the Investors' Education & Protection Fund.

4.1 The financial institutions, banks and other parties recalled their loans and debentures upon company's failure to pay its dues on time. As per recall notices, repayment liability of principal amount is Rs. 28209.20 lacs, accumulated interest till 31.03.12 is Rs.32025.47 lacs (previous year Rs. 47963.00 lacs) and additional interest, penalty & liquidated damages for the F.Y. 2011-12 is Rs. 3816.27 lacs (previous year Rs. 5053.65 lacs). The lenders have filed recovery cases with Debt Recovery Tribunal and two of the lenders have filed winding up petitions in Gujarat High Court, which have been admitted.

4.2 The lenders holding post-dated cheques have initiated action u/s. 138 of the Negotiable Instruments Act, 1881 for Rs. 4536.68 lacs (previous year Rs. 4536.68 lacs).

4.3 The company has filed the scheme of Arrangement and Compromise with the Financial Institutions/ Banks and Shareholders filed on 17/07/2008 bearing petition No. 401/2008 and it is approved by majority of Shareholders and lenders in the meeting held on 27/08/2008 and 30/08/2008 respectively. The said scheme is pending before the Hon'ble Court of Gujarat for further hearing.

4.4 During the year, Company has entered into settlement with some of the lenders which has resulted into waiver of a portion of outstanding loans. The Company has settled said loans for Rs.2921.11 lacs as against carrying amount of Rs.8749.25 lacs. The resultant surplus of Rs.5828.14 lacs arising on such settlement agreed by the lenders has been credited to Profit & Loss Account by Rs.84.09 lacs and to Capital Reserve Account by Rs.5744.05 lacs on the basis of the purpose for which the loans were raised or where the complete details were not available on the basis of their actual utilization of the fund either for working capital or for acquisition of assets. Such treatment is in accordance with AS 9 - "Revenue Recognition" wherein the definition of "Revenue" excludes similar transactions and the same interpretation is also supported by various judicial pronouncements under Tax Laws. However in one case expert advisory committee of ICAI has taken a contrary view.

5 In expectation of a positive outcome of settlement and compromise with lenders referred to above, the accounts have been prepared on "Going Concern" basis. This will hold good subject to receipt of required support from the Lenders, Banks, Financial Institutions and other Creditors and in case the going concern basis is vitiated, necessary adjustment will be required in the value of Assets and Liabilities.

6 The company has not provided interest of Rs. 3816.27 lacs (Previous Year Rs. 5053.65 lacs) on borrowings and Debentures for the year ending on 31st March 2012. Therefore, profit of the year would have been lower by Rs 3816.27 lacs. Accumulated interest not provided for upto 31-03-2012 is Rs. 51779.-27 lacs (Previous Year Rs. 47963.00 lacs).

7 (a) The Company has been sanctioned credit facilities of Letters of Credit, Overdraft and Guarantee against lien of Fixed Deposits. The Company has pledged F.D. for the Letter of Credit, Overdraft facility and Guarantee of Rs. 15.00 lacs, Rs. 1214.64 lacs and Rs. 47.59 Lacs respectively up to 31.03.2012.(Previous Year Rs. 99.49 lacs against L/C, Rs. 447.20 lacs against over draft facility and Rs.47.59 against Guarantee).

(b) The Company has pledged fixed deposit of Rs 1.00 Lacs with Sales Tax Department - Pondicherry.

8 During the year the Company, at the instance of its Board of Directors, undertaken an exercise to evaluate its Fixed Assets on the basis of Useful life, carrying value and need for the provision of depreciation as per the requirements of Sch. XIV of the Companies Act, 1956 and other related aspects. The said exercise has been carried out under the supervision and assistance of an expert professional Accounting Firm.

The Company has received Appraisal Report from the said Firm, The Management is examining the technical aspects of the observations, suggestions and recommendations contained in the said report and will give necessary accounting treatment on final evaluation of all related aspects and . issues

9. Outstanding balances as on 31-03-2012 of Creditors, Debtors, Secured and Unsecured Loans and Loans & Advances given are subject to confirmation / reconciliation. Necessary adjustments if any will be made on completion of reconciliation.

10 The Company has made Investment of Rs. 13.06 Lacs into equity shares and Rs.18.60 Lacs in Share Application Money in Shree Rama (Mauritius) Limited its wholly owned subsidiary company.

As required in Accounting Standard 13 "Accounting for Investment" issued by ICAI, the company has already provided for diminution in the value of investment of the shares and share application money in earlier years.

11. (a) During the year there is net Exchange Fluctuation loss of Rs 6.94 lacs (Previous Year loss of Rs. 12.18 Lacs) on current account & the same is shown separately.

(b) The Exchange Fluctuation loss on Capital Account of Rs. 11.03 lacs is capitalized to cost of Fixed Assets (Previous year gain of Rs. 7.05 lacs )

12 In view of carried forward business losses and depreciation in the books the company is not liable for Income Tax Liability under section 115JB of Minimum Alternative Tax

13. In view of the Accumulated loss,

(i) No transfer has been made to the Debenture Redemption Reserves in respect of Secured and Unsecured Debentures and

(ii) No amount is transferred to Capital Redemption Reserve in respect of preference shares.

14. The Company has received orders from ITAT from time to time in respect of various Appeals of past years. In view of favorable appellate orders and on the basis of working given by Professional Expert. The Company will not be required to pay liabilities for Tax, Interest, Penalty etc. for which it has already made provision for the tax liabilities, interest, penalty etc. amounting to Rs. 1670.04 lacs In the books.

15. Operating Lease

At the end of the year, the Company has taken certain machineries on rental basis for the period of 3 years on yearly rent of Rs. 3,60,000.

16. The Company is primarily engaged in the business of manufacture & sale of "Packaging Products and "Diamond". The Company has identified & reported two primary business segments namely "Packaging" & "Diamond" in the context of Accounting Standard 17 on "Segment Reporting" taking into account nature of products and service, the differing risks & returns and the internal business reporting systems. The accounting policies adopted for segment reporting are in line with the accounting policies of the company. Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the Segment.

17 (a) The Accounting Standard 28 - "Impairment of Assets" issued by Institute of Chartered Accountants of India has become applicable to the Company from 1st April, 2004.

(b) In view of profit earned during current year as well as in past consistently and projection of future profitability, the Management is of the opinion that its assets are not impaired and no provision for impairment loss is to be made in the books.

18 Derivative instruments and Unhedged Foreign Currency Exposure:

1. Derivative instruments outstanding: NIL

2. Unhedged Foreign Currency Exposure:

19 Previous year figures have been regrouped / re-stated / reclassified where necessary. Figures in brackets relate to the previous year unless otherwise stated.


Mar 31, 2011

1. Contingent Liabilities :

Sr. Amounts (Rs. in lacs)

No. Particulars 2010-2011 2009-2010

1 (A) Dividend on 15% Redeemable Cumulative 950.00 850.00 Preference Shares till date (See Note 3 below)

(B) Interest on Unpaid Dividend (Till Date) 940.50 750.50

2 Additional interest, Penal interest and 5053.65 5278.05 liquidated damages on loans

3 (i) Corporate guarantee given to the Banks for term loan of 800.00 800.00 Rs 400.00 Lacs each. [Note No : 2 (a)]

(ii) Bank Gurantee given to GEB against security of Bank Deposits 46.74 0.00

4. Suit filed by The Kalupar Comm. Co.Op. Bank Ltd in 185.36 162.60 respect of bills payable. [Note No : 2 (b)]

5. (A) Claims against the company not acknowledged as debts. 161.98 178.33

Excise authorities have issued show-cause notices for various credits availed as well as rejecting the claims of the company which the company has disputed and no provision is made in the books.

(B) Interest on above demands 0.00 111.51

6 Estimated amount of contracts remaining to be executed on Capital Account (Net of Advances) 387.82 65.33

7 Estimated amount of consultancy charges in respect of Diamond Division 0.00 70.00

2. (a) Andhra Bank Ltd. has filed suit for recovery of Rs. 564.89 lacs (including Interest) in Debt Recovery Tribunal against East West Polyart Ltd. as Principal Debtor and against the company as being a guarantor. Andhra Bank has given notice u/s 434 of the Companies Act, 1956 for winding up of the Shree Rama Multi - Tech Ltd.

(b) The Kalupur Commercial Co.op. Bank (KCCB) has filed a suit against the company for recovery of Rs.50 lacs towards Bills Payable and interest accrued thereon of Rs.135.36 lacs till 31.03.11 (P.Y Rs 112.60 lacs) against which the company has preferred an appeal and no provision is made in the books.

3. (a) 10,00,000 15% Cumulative Preference Shares of Rs.100/- each issued to IDBI were redeemable in three equal installments at the end of third, fourth and fifth year from 301h March,1998. 3,33,334 Preference Shares being first installment were redeemed on 30,h March, 2001. The remaining 6,66,666 Preference Shares are yet to be redeemed.

(b) The Company has not transferred Unpaid Dividend of Rs.100 Lacs for the year 2000-01 on 666666 15% Redeemable Preference Share to separate designated Account as required u/s 205A of the Companies Act, 1956 ("the Act") and subsequently not transferred to Investor Education & Protection fund as per sec. 205 of the Act. The company has also not paid Dividend Distribution Tax of Rs. 10,19,999/- on Preference share Dividend for the year 2000-01.

(c) As per the terms of the Issue the company has to pay interest on unpaid / contingent dividend @ 19% p.a. The liability for such interest whould be Rs. 940.50 lacs (Previous Year Rs. 750.50 Lacs).

4.1 The financial institutions, banks and other parties recalled their loans and debentures upon company's failure to pay its dues on time. As per recall notices, repayment liability of principal amount is Rs.369.58 crores, accumulated interest till 31.03.11 is Rs.479.63 crores (previous year Rs.429.09 crores) and additional interest, penalty & liquidated damages for the F.Y. 2010-11 is Rs.50.54 crores (previous year Rs.52.78 crores). The lenders have filed recovery cases with Debt Recovery Tribunal and two of the lenders have filed winding up petitions in Gujarat High Court, which have been admitted.

4.2 The lenders holding post-dated cheques have initiated action u/s. 138 of the Negotiable Instruments Act, 1881 for Rs. 4536.68 lacs (previous year Rs. 4536.68 lacs).

4.3 The company has filed the scheme of Arrangement and Compromise with the Financial Institutions/Banks and Shareholders filed on 17/07/08 bearing petition No. 401/2008 and it is approved by majority of Shareholders and lenders in the meeting held on 27/08/2008 and 30/08/2008 respectively. The said scheme is pending before the Hon'ble Court of Gujarat for further hearing.

4.4 During the year, the company has settled debt with its lender - IDBI and the difference between the actual recorded liability & settled amount of Rs. 568.33 lacs credited to Profit & Loss account under the head "Extra Ordinary items".

5 In expectation of a positive outcome of settlement and compromise with lenders referred to above, the accounts have been prepared on "Going Concern" basis. This will hold good subject to receipt of required support from the Lenders, Banks, Financial Institutions and other Creditors and in case the going concern basis is vitiated, necessary adjustment will be required in the value of Assets and Liabilities.

6 The company has not provided interest of Rs. 50.54 Crores (Previous Year Rs.52.78 Crores) on borrowings and Debentures for the year ending on 31st March 2011. Therefore, profit of the year would have been lower by Rs 50.54 Crores. Accumulated interest not provided for upto 31-03-2011 is Rs.479.53 Crores (Previous Year Rs.429.09 Crores)

7 (a) The company has been sanctioned credit facilities of Letters of Credit, Overdrafts and guarantees against lien of Fixed Deposits. The Company has utilized the Letter of Credit and overdraft facility of Rs. 99.49 lacs and Rs. 447.20 lacs up to 31.03.2011.(Prev. Year Rs. 480.35 lacs)

(b) The Company has pledged fixed deposit of Rs 1.00 Lacs with Sales Tax Department - Pondicherry.

8 During the year the Company, at the instance of its Board of Directors, undertaken an exercise to evaluate its Fixed Assets in terms of their refined useful life, carrying value and need for the provision of depreciation as the requirements of Sen. XIV of the Companies Act, 1956 and other related aspects. The said exercise has been carried out under the supervision and assistance of an expert professional Accounting Firm.

Considering the Interim Appraisal Report received from the said Firm, the depreciation in terms of the requirements of the Sch. XIV is worked out to Rs. 2324.94 Lacs after netting of excess depreciation of Rs. 89.07 lacs provided in earlier years and the same has been provided in the books.

9. Outstanding balances as on 31-03-2011 of Creditors, Debtors, Secured and Unsecured Loans and Loans & Advances given are subject to confirmation / reconciliation. Necessary adjustments if any will be made on completion of reconciliation.

10. The Company has made Investment of Rs. 13.06 Lacs into equity shares and Rs. 18.60 Lacs in Share Application Money in Shree Rama (Mauritius) Limited its wholly owned subsidiary company.

As required in Accounting Standard 13 "Accounting for Investment" issued by ICAI, the company has already provided for diminution in the value of investment of the shares and share application money in earlier years.

11. (a) During the year there is net Exchange Fluctuation loss of Rs 12.18 lacs (Previous Year gain of Rs.395.26 Lacs) on current account & the same is shown separately.

(b) The Exchange Fluctuation loss on capital Account of Rs.7.05 lacs is capitalized to cost of Fixed Assets (Previous year gain of Rs. 4.11 lacs )

12. In view of carried forward business losses and depreciation in the books the company is not liable for Income Tax Liability under section 115JB of Minimum Alternative Tax

13. In view of the Accumulated loss,

(i) No transfer has been made to the Debenture Redemption Reserves in respect of Secured and Unsecured Debentures. &

(ii) No amount is transferred to Capital Redemption Reserve in respect of preference shares.

The Computation of Net Profits under section 349 of the Companies Act, 1956, for directors remuneration has not been enumerated since no commission is paid to the Directors. Remuneration paid to Directors is as per Schedule XIII of the Companies Act, 1956.

[b] Shri Sharad C. Jariwala was re-appointed as Managing Director for three years w.e.f 27,h June, 2009 and remuneration is paid to him as per the terms approved by the company at Annual General Meetings on 19th September, 2009 for which the company has received approval from Central Government on 12th March, 2011.

16. Disclosure pursuant to Accounting Standard - 15 [Revised] 'Employee Benefits':

A The Company has, with effect from 1st April, 2007, adopted Accounting Standard 15, Employee Benefits [revised 2005] [the 'revised AS 15']. In accordance with the transitional provisions governing gratuity valuation - defined benefit plan and leave encashment liability - long term liability based on actuarial valuation is as follows :

B Defined benefit plan and long term employment benefit:

a General description:

Gratuity (Defined benefit plan):

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary [last drawn salary] for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

b Leave wages (Long term employment benefit) :

The leave wages are payable to all eligible employees at the rate of daily salary for each day of accumulated leave on death or on resignation or upon retirement on attaining superannuation age.

20. The Company is primarily engaged in the business of manufacture & sale of "Packaging Products and Diamond". The Company has identified & reported two primary business segments namely "Packaging" & "Diamond" in the context of Accounting Standard 17 on "Segment Reporting" taking into account nature of products and service, the differing risks & returns and the internal business reporting systems. The accounting policies adopted for segment reporting are in line with the accounting policies of the company.

Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the Segment.

21. (a) The Accounting Standard 28 - "Impairment of Assets" issued by Institute of Chartered Accountants of India has become applicable to the Company from 1st April, 2004.

(b) In view of profit earned during current year as well as in past consistently and projection of future profitability, the Management is of the opinion that its assets are not impaired and no provision for impairment loss is to be made in the books.

23. Related Party Disclosures:

The list of related parties as identified by the Management is as under.

[I] List of related parties and its relationships.

Party Relationship

A) Shree Rama (Mauritius) Limited Subsidiary Company

B) Key Management Personnel

Mr. R.S. Patel Chairman & Director

Mr. Sharad C. Jariwala Managing Director

C) R.S. Patel & Co. Firm in which director is interested

24. Figures less than Rs. 500 have been shown at actual, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest thousands.

25. Previous year figures have been regrouped / re-stated / reclassified where necessary. Figures in brackets relate to the previous year unless otherwise stated.

26. Information required under Para 3 & 4 of Part II of Schedule VI to the Companies Act, 1956: (A) Licensed and Installed capacity and Actual production:

(i) Licensed Capacity

New Industrial Policy exempts company's products from licensing requirements.

(ii) Installed Capacity :

(Optimum Production Capacity per annum as certified by management on the basis of standard product mix and relied upon by the auditors being a technical matter)


Mar 31, 2010

1. Contingent Liabilities :

Sr. Amounts (Rs. in lacs)

No. Particulars 2009-2010 2008-2009

1 (A) Dividend on 15% Redeemable Cumulative 850.00 750.00

Preference Shares till date (See Note 3 below) (B) Interest on Unpaid Dividend (Till Date) 1234.11 893.77

2 Additional interest, Penal interest and 5278.05 5325.09 liquidated damages on loans

3 Corporate guarantee given for East West Polyart Limited to IDBI Bank Ltd & Andhra bank for term loan of

Rs 400.00 Lacs each. [Note No : 2 (a)] 800.00 800.00

4. Suit filed by The Kalupar Comm. Co.Op. Bank Ltd in

respect of bills payable. [Note No : 2 (b)] 162.60 142.63

5. (A) Claims against the company not acknowledged as debts.

Excise & Service Tax authorities have issued show-cause 178.33 64.04

notices for various credits availed as well as rejecting the claims of the company which the company has disputed and no provision is made in the books.

(B) Interest on above demands 111.51 88.11

6 Estimated amount of contracts remaining to be executed on

Capital Account (Net of Advances) 65.33 20.95

7 Estimated amount of consultancy charges in respect of

Diamond Division 70.00 0.00

2. (a) Andhra Bank Ltd. has filed suit for recovery of Rs. 564.89 lacs (including Interest) in Debt Recovery Tribunal against East West Polyart Ltd. as Principal Debtor and against the company as being a guarantor. Andhra Bank has given notice u/s 434 of the Companies Act, 1956 for winding up of the Shree Rama Multi - Tech Ltd. (b) The Kalupur Commercial Co.op. Bank (KCCB) has filed a suit against the company for recovery of Rs.50 lacs towards Bills Payable & interest accrued thereon of Rs.112.60 lacs till 31.03.10 (P.Y Rs 92.63 lacs) against which the company has preferred an appeal and no provision is made in the books.

3. (a) 10,00,000 15% Cumulative Preference Shares of Rs.100/- each issued to IDBI were redeemable in three equal installments at the end of third, fourth and fifth year from 30m March,1998. 3,33,334 Preference Shares being first installment were redeemed on 30lh March, 2001. The remaining 6,66,666 Preference Shares are yef to be redeemed.

(b) The Company has not transferred Unpaid Dividend of Rs.100 Lacs for the year 2000-01 on 666666 15% Redeemable Preference Share to separate designated Account as required u/s 205A of the Companies Act, 1956 ("the Act") and subsequently not transferred to Investor Education & Protection fund as per sec. 205 of the Act. The company has also not paid Dividend Distribution Tax of Rs. 10,19,999/- on Preference share Dividend for the year 2000-01.

(c) The company has agreed to pay interest on unpaid / contingent dividend @ 19% p.a. The liability for such interest would be Rs. 1234.11 lacs (Previous Year Rs. 893.77 Lacs)

4. The company has availed benefit of concessional custom duty on machineries imported under Export Promotion Capital Goods scheme (EPCG) during 1998-99 to 2001-02. The companys export obligation was revised and refixed to Rs. 444.57 crores. The company has received order of Jt. Director of Foreign Trade Dt. 02/06/10 discharging the company from obligations on fulfillment of export obligations. The Company has provided for the probable liability of (i) Custom Duty (ii) Interest there on as well as (iii) Depreciation on Custom Duty capitalized to cost of assets in earlier years. Now on discharge of export obligation reversal entries giving appropriate effects in books have been passed.

5.1 The financial institutions and banks recalled their loans and debentures upon companys failure to pay its dues on time. As per recall notices, repayment liability of principal amount is Rs.377.91 crores, accumulated interest till 31.03.10 is Rs.429.09 crores (previous year Rs.376.31 crores) and additional interest, penalty & liquidated damages till 31.03.10 is Rs.52.78 crores (previous year Rs.53.25 crores). The lenders have filed recovery cases with Debt Recovery Tribunal and two of the lenders have filed winding up petitions in Gujarat High Court, which have been admitted.

5.2 The lenders holding post-dated cheques have initiated action u/s. 138 of the Negotiable Instruments Act, 1881 for Rs. 4536.68 lacs (previous year Rs. 4536.68 lacs).

5.3 The scheme of Arrangement and Compromise with the Financial Institutions/Banks and Shareholders filed on 17/07/08 bearing petition No. 401/2008 and it is approved by majority of Shareholders and lenders in the meeting held on 27/08/2008 and 30/08/2008 respectively. The said scheme is pending before the Honble Court of Gujarat for further hearing.

6. In expectation of a positive outcome of settlement and compromise with lenders referred to above, the accounts have been prepared on "Going Concern" basis. This will hold good subject to receipt of required support from the Lenders, Banks, Financial Institutions and other Creditors and in case the going concern basis is vitiated, necessary adjustment will be required in the value of Assets and Liabilities.

7. The company has not provided interest of Rs. 52.78 Crores (Previous Year Rs.52.95 Crores) on borrowings and Debentures for the year ending on 319March 2010. Therefore, losses of the year are lower by Rs 52.78 Crores. Accumulated interest not provided for upto 31-03-2010 is Rs.429.09 Crores (Previous Year Rs.376.31 Crores)

8. (a) The company has been sanctioned credit facilities of Letters of Credit and Overdrafts against lien of

Fixed Deposits. The Company has utilized the Letter of Credit limit of Rs.480.35 lacs up to 31.03.2010.(Prev. Year Rs. 104.25 lacs)

(b) The Company has pledged fixed deposit of Rs 1.00 Lacs with Sales Tax Department - Pondicherry.

9. Excess Depreciation of Rs. 26.77 lacs provided in earlier years are withdrawn from opening balance of Depreciation fund and shown under the head "Short/Excess Provision of earlier years.

10. Outstanding balances as on 31-03-2010 of Creditors, Debtors, Secured and Unsecured Loans and Loans & Advances given are subject to confirmation / reconciliation. Necessary adjustments if any will be made on completion of reconciliation.

11. The Company has made Investment of Rs. 13.06 Lacs inio c^iiy shares and Rs.18.60 Lacs in Share Application Money in Shree Rama (Mauritius) limited its wholly owned subsidiary Company.

As required in Accounting Standard 13 "Accounting for Investment" issued by ICAI, the company has already provided for diminution in the value of investment of the shares and share application money in earlier years.

12. (a) During the year there is net Exchange Fluctuation Gain of Rs. 395.26 lacs (Previous Year gain of Rs. 3.89 Lacs) on current account & the same is shown separate,y. (b) The Exchange Fluctuation gain on capital Account of Rs. 4.11 lacs is capitalized to cost of Fixed Assets (Previous Year loss of Rs. 38.55 lacs)

13. Prior period income includes Income Tax refund for A. Y. 06-07 & 07-08 aggregating to Rs. 30.78 lacs received during the year in respect of tax deducted by customers but not indentified and separately accounted for in the books in respective years.

14. In view of carried forward business losses and depreciation in the books the company is not liable for Income Tax Liability under section 115JB of Minimum Alternative Tax

15. In view of the loss,

(i) No transfer has been made to the Debenture Redemption Reserves in respect of Secured and Unsecured Debentures,

(ii) No amount is transferred to Capital Redemption Reserve in respect of preference shares.

16. Disclosure pursuant to Accounting Standard - 15 [Revised] Employee Benefits:

A The Company has, with effect from 1" April, 2007, adopted Accounting Standard 15, Employee Benefits [revised 2005] [the revised AS 15]. In accordance with the transitional provisions governing gratuity valuation - defined benefit plan and leave encashment liability - long term liability based on actuarial valuation is as follows :

B Defined benefit plan and long term employment benefit: a General description:

Gratuity (Defined benefit plan):

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on death or resignation or retirement at 15 days salary [last drawn salary] for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

b Leave wages (Long term employment benefit) :

The leave wages are payable to all eligible employees at the rate of daily salary for each day of accumulated leave on death or on resignation or upon retirement on attaining superannuation age.

17. During the year in pursuance of AS 22 - "Taxes on Income" issued by Institute of Chartered Accountants of India, the Company has provided for Deferred Tax Assets arising on account of depreciation as under :-

18 The Company is primarily engaged in the business of manufacture & sale of "Packaging Products and Diamond". The Company has identified & reported two primary business segments namely "Packaging" & "Diamond" in the context of Accounting Standard 17 on "Segment Reporting" taking into account nature of products and service, the differing risks & returns and the internal business reporting systems. The accounting policies adopted for segment reporting are in line with the accounting policies of the company.

Revenue and Expenses have been identified to a segment on the basis of relationship to operating activities of the Segment.

19 (a) The Accounting Standard 28 - "Impairment of Assets" issued by Institute ofChartered Accountants of India has become applicable to the Company from 1st April, 2004.

(b) In view of cash profit earned during current year as well as past consistently and projection of future profitablility, the Management is of the opinion that its assets are not impaired and no provision for impairment loss is to be made in the books.

20 Derivative instruments and Unhedged Foreign Currency Exposure:

1. Derivative instruments outstanding: NIL

2. Unhedged Foreign Currency Exposure:

21. Figures less than Rs. 500 have been shown at actuals, wherever statutorily required to be disclosed, as the figures have been rounded off to the nearest thousands.

22. Previous year figures have been regrouped / re-stated / reclassified where necessary. Figures in brackets relate to the previous year unless otherwise stated.